Economic Daily Outlook




Fed seen biding time, assessing jobs gains

The Federal Reserve on Tuesday is expected to hold a steady course on monetary policy, acknowledging a mildly brighter economic outlook while refraining from any suggestion that further easing is now off the table.

Indeed, the central bank, sifting through conflicting economic signals, is unlikely to offer much of anything in the way of fresh clues on its policy course after its one-day meeting.

OPINION: Would a Higher Top Tax Rate Raise Revenues? (Bruce Bartlett)

On Friday, Prof. Allan Meltzer of Carnegie Mellon University, a well-known conservative economist, offered a commentary in The Wall Street Journal arguing against policies to equalize the distribution of income.

His key piece of evidence is the chart below, from a study by the Swedish economists Jesper Roine and Daniel Waldenstrom, that shows the share of income accruing to the top 1 percent of earners in seven Western democracies. They all follow the same trend line, Professor Meltzer says, and it proves that “domestic policy can’t be the principal reason for the current spread between high earners and others.”


Zillow Real Estate Research Report on January Housing & Rental Markets


New consumer agency reassures banks on disclosure

The new consumer agency on Monday added protections to privileged information banks turn over to the regulator, in a proposed rule that addressed bank executives’ fears about disclosure.

The new rule will ensure that sensitive documents such as legal memos submitted to the Consumer Financial Protection Bureau for regulatory or supervisory reasons cannot be subpoenaed by consumer groups or others looking to sue those firms.

ALSO IN REGULATIONFED releases details on bank stress test


Health care reform: States may test HHS power

If the Supreme Court upholds the health care reform law, can a state keep fighting its implementation?

The law is very clear: The Department of Health and Human Services has the power to set up a federal health insurance exchange in states that don’t set up their own. But a federal exchange can’t function solo. It needs some help from a state’s Medicaid program and insurance department.


Gas prices trigger Obama scramble

The White House scrambled Monday to contain the political damage from rising gas prices, which have emerged as a primary threat to President Obama’s reelection.

Obama gave White House interviews touting his energy policies to TV stations in several regions, including the battleground states of Florida, Ohio and Pennsylvania, and Interior Secretary Ken Salazar appeared in the White House briefing room to emphasize that “all options are on the table” to lower prices.

Senate to weigh in on Energy Department loan program

The Senate Energy and Natural Resources Committee will hold a hearing on the Energy Department’s loan program Tuesday, an issue that has risen to the top of House Republicans’ agenda but has gotten little play in the upper chamber.

Committee Chairman Jeff Bingaman (D-N.M.) has been reluctant to weigh in on the controversy surrounding the loan program, arguing that House Republicans have politicized the issue in a string of hearing on the $535 million loan to failed solar firm Solyndra.

OPINION: America’s Fossil-Fuels Job Boom (Annie Lowrey)

With gasoline prices spiraling higher and weighing on economic confidence, President Obama called over the weekend for further investment in a “clean-energy future.” But there is a flip side to that increasing pain at the pump: a huge jobs boom in fossil fuels industries.

Rising global demand – along with, more recently, concern over the situation in Iran – has driven gasoline prices higher. The climbing prices have been a boon for oil businesses even as they have cut into household budgets, and big oil companies have added rigs and workers in recent years.


Virtual Education Companies Face Increasing Scrutiny

As researchers, politicians, and the general public have begun to question the results of fully online virtual schooling, private providers—particularly for-profit companies—that supply curriculum, content, and sometimes instruction and school management for online education are facing the most scrutiny.

Recent studies suggesting declining achievement among full-time public virtual school students don’t always distinguish between publicly and privately run schools. Still, the private sector and its two biggest for-profit providers—K12 Inc. and Connections Education—appear to be taking most of the heat.


U.S. Officials Debate Speeding Afghan Pullout

The Obama administration is discussing whether to reduce American forces in Afghanistan by at least an additional 20,000 troops by 2013, reflecting a growing belief within the White House that the mission there has now reached the point of diminishing returns.

Accelerating the withdrawal of United States forces has been under consideration for weeks by senior White House officials, but those discussions are now taking place in the context of two major setbacks to American efforts in Afghanistan — the killings on Sunday of Afghan civilians attributed to a United States Army staff sergeant and the violence touched off by burning of Korans last month by American troops.

Trade Fight Flares on China Minerals

China’s state media warned on Tuesday that U.S. plans to push a case involving rare earths before the World Trade Organization could trigger a backlash and hurt ties.

China’s state-run Xinhua news agency on Tuesday said in a commentary that Beijing will defend the nation’s rare-earth industry, which involves the mining and processing of key minerals used in everything from consumer gadgets to electric cars to defense systems.

“It is rash and unfair for the United States to put forward a lawsuit against China before the WTO, which may hurt economic relations between the world’s largest and second-largest economies,” it said.

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