Economic Daily Outlook




Fed Takes a Break to Weigh Outlook

The Federal Reserve is pausing after a six-month campaign to boost growth, while policy makers assess a puzzling economic outlook.

Fed officials meeting next week are unlikely to take any new actions to spur the recovery, and they are likely to emerge with a slightly more upbeat—but still very guarded—assessment of the economy’s performance. This comes after a series of moves in recent months, including recasting its securities portfolio in January as a way to spur growth. Then the central bank signaled in January that short-term interest rates are likely to stay near zero through most of 2014.

OPINION: Real Government Spending in Two Recoveries (Paul Krugman)

This is just current government expenditures divided by the GDP deflator, starting from 1982IV and 2009II; no attempt to separate out unemployment benefits, other transfers, etc.. Slightly weaker than the purchases-only comparison, mainly because unemployment benefits fell faster under Reagan, but the story remains the same.

ALSO: “Stimulus Denial, Part N,” “They’re Baaack!,” & “Schrödinger’s Tax



Lenders Stress Over Test Results

Some very large banks are clashing with the Federal Reserve over how much detail the central bank will reveal about them when it releases the results of its latest stress test.

The 19 biggest U.S. banks in January submitted reams of data in response to regulators’ questions, outlining how they would perform in a severe downturn. Now, citing competitive concerns, bankers are pressing the Fed to limit its release of information—expected as early as next week—to what was published after the first test of big banks in 2009.



Some Republican governors wary of House GOP’s Medicaid reform proposals

Several Republican governors are raising concerns with a House GOP Medicaid reform proposal that’s expected to be reintroduced shortly.

The Republican budget that the House approved last year would have replaced the Medicaid program with a block grant that gives states more flexibility to run their programs while cutting federal funding for the health program for low-income Americans. Budget Committee Chairman Paul Ryan (R-Wis.) is expected to propose a similar approach again when he releases his FY 2013 budget this month or next.



EDITORIAL: Drill Baby Drill, Redux (NYT)

It’s campaign season and the pandering about gas prices is in full swing. Hardly a day goes by that a Republican politician does not throw facts to the wind and claim that rising costs at the pump are the result of President Obama’s decisions to block the Keystone XL pipeline and impose sensible environmental regulations and modest restrictions on offshore drilling.

Next, of course, comes the familiar incantation of “drill, baby, drill.” Mr. Obama has rightly derided this as a “bumper sticker,” not a strategy. Last week, he agreed that high gas prices were a real burden, but said the only sensible response was a balanced mix of production, conservation and innovation in alternative fuels.

There are lots of reasons for the rise in gas prices, but the lack of American production is not one of them. Domestic crude oil production is actually up from 5.4 million barrels a day in 2004 to 5.59 million now; imports have dropped by more than 10 percent in the same period. Despite a temporary slowdown in exploration in the Gulf of Mexico after the BP oil disaster, the number of rigs in American oil fields has quadrupled over three years. There have been new discoveries and the administration has promised to open up more offshore reserves. To say that Mr. Obama has denied industry access is nonsense.



Variety of Models Fuels Hybrid Charter Growth

In innovation-friendly pockets across the country, the number of hybrid charter schools—those that blend online and face-to-face instruction—has been growing over the past five years.

But now, the educational model seems to have shifted into overdrive.

Major philanthropies—most notably, the Bill & Melinda Gates Foundation—have launched funding initiatives directed specifically at hybrid school models, which because of their unorthodox ways of allocating resources often are able to operate best as charter schools



Obama Shifts Toward Israel on Iran

U.S. President Barack Obama, seeking to mollify critics of his Iran policy, said he could employ a “military effort” to thwart Tehran’s pursuit of nuclear weapons but warned that “too much loose talk of war” could undermine diplomatic efforts.

Mr. Obama’s efforts to recalibrate the administration’s position—cooling talk of war while nodding to the concerns of hawks such as Israeli Prime Minister Benjamin Netanyahu—won some applause, including from the Israeli leader. Some of Israel’s strongest backers on Capitol Hill weren’t appeased, however.


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