Economy

Economic Daily Outlook

FRIDAY, MAY 4, 2012

 

ECONOMICS:

Jobs Report Will Provide Fodder for Campaigns (Wall Street Journal)

By Laura Meckler and Sara Murray

Politically speaking, Friday’s unemployment report will boil down to a simple set of numbers: two men, one job.

Mitt Romney and President Barack Obama’s campaigns will be combing the figures on April job growth and unemployment to look for an edge in their battle for the presidency. The numbers are the first to come out since Mr. Romney became the likely Republican nominee in a race whose central conflict is expected to be Mr. Obama’s stewardship of the U.S. economy.

The recovery had appeared to be gaining traction when private-sector and government employers added more than 200,000 jobs a month in December through February. But then payrolls grew by just 120,000 in March, a pace too slow to pull down the unemployment rate from 8.2%, fanning fears of a spring slowdown.

One figure that will be closely watched on Friday: private-sector employment. If such employers added more than 161,000 jobs, the Obama campaign would be able to trumpet that private firms have racked up a net gain in jobs during his presidency.

The Bureau of Labor Statistics will release employment numbers at 8:30AM here.

 

REGULATION:

U.S. readies proposal to clamp down on fracking (Reuters)

By Ayesha Rascoe

The Obama administration wants to clamp down on shale gas drilling on public lands and set standards that proponents of tougher regulation hope will provide a blueprint for drilling oversight nationwide.

Industry sources said the Interior Department could propose a new rule on hydraulic fracturing, or fracking, as early as Friday.

The measure would require natural gas drillers to disclose chemicals they use to frack wells, a controversial process that involves injecting water, sand and chemicals deep underground to extract fuel from rock formations.

Fracking has been essential to unlocking the nation’s massive shale gas reserves, but critics argue that the practice has polluted water and hurt the environment.

The administration has said it supports shale oil and gas development, but has also called for strong oversight.

Administration officials have said they hope the rules could provide a template for states, which handle most of the regulation of fracking.

Nonbanks Battle to Narrow Scope of CFPB Supervision (American Banker)

By Kate Davidson

Nonbank trade groups are calling on the Consumer Financial Protection Bureau to narrow the definitions it will use to determine which nonbanks will be subject to federal supervision.

The bureau has proposed to regulate large debt collection and credit reporting firms, the first two industries to be identified by CFPB for inclusion in the program. But in comment letters to the agency, industry groups complained that the bureau is skirting a requirement to examine the impact that the proposal would have on small businesses.

They also said the thresholds the bureau has proposed are too low, and would include a number of small companies, rather than simply the largest participants in the market.

“The mere fact that this rule identifies ‘larger participants’ does not mean that it has no impact on small business,” David Hirschmann, the president and chief executive of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness, said in a comment letter last month.

Hirschmann said the rule fails to comply with the Small Business Regulatory Enforcement Fairness Act, which requires the bureau to convene a panel of small business experts if it believes a rule would have a significant impact on small firms.

 

HEALTHCARE:

FDA says number of new drug shortages down (Reuters)

By Anna Yukhananov

Health officials said the number of new shortages of crucial drugs used to treat cancer and other illnesses had been halved compared to a year ago, and attributed the improvement to earlier notice from drugmakers about looming supply issues.

There have been 42 newly scarce drugs so far this year, compared to 90 in the same period a year ago, U.S. Food and Drug Administration Commissioner Margaret Hamburg said on Thursday on the agency’s website.

Efforts to combat shortages escalated last year when 250 medicines were in short supply, up from 56 in 2006. Some doctors have had to postpone care or use second-best drugs or more costly alternatives to compensate for shortages.

According to an FDA list, which is updated daily, there are currently about 120 drugs regarded as being in short supply.

FAQ: Obama vs. Ryan on Controlling Federal Medicare Spending (Kaiser Health News)

By Marilyn Werber Serafini

It may come as a surprise that President Barack Obama and Rep. Paul Ryan, the Wisconsin Republican who chairs the House Budget Committee, are pushing the same target rate for curbing annual federal spending on Medicare. Each would set it at half a percentage point higher than the growth rate of the economy – the gross domestic product.

Looking at their plans in more detail, however, the practical effects are likely to be very different when it comes to restraining federal spending and impact on seniors.

“There is a consensus, an agreement that Medicare is unsustainable,” said Ryan spokesman Conor Sweeney. “That’s where the agreement is, and it’s where the agreement ends.”

Here are some questions and answers about the Democratic and Republican approaches to moderating spending on the popular program, which covers 47 million seniors and disabled people.

U.S. to Seek New Uses for Abandoned Drugs (Wall Street Journal)

By Thomas M. Burton

he U.S. government said Thursday it will work with large pharmaceutical companies to try to find new uses for once-promising drugs that have been cast aside by the industry.

The National Institutes of Health initially will work with Pfizer Inc., PFE -0.26% Eli Lilly LLY -0.51% & Co. and AstraZeneca AZN +0.70% PLC to match abandoned drugs with researchers from universities, hospitals and the NIH.

Researchers at the NIH’s new National Center for Advancing Translational Sciences generally will focus on drugs known to work on a specific gene but that somehow failed in initial testing by the company behind them. The goal is to find a different ailment they can treat, since it often is easier to work with an existing drug than create one from scratch.

The NIH has set aside $20 million for the program in its fiscal year 2013, which begins Oct. 1. The effort is in large part the idea of NIH Director Francis S. Collins, who said the program “will match U.S. researchers to dozens of these companies’ compounds, and we’re happy to serve as matchmaker.”

 

ENERGY:

TransCanada expected to reapply for Keystone pipeline permit as soon as Friday (Washington Post)

By Juliet Eilperin

The Canadian firm behind the controversial Keystone XL pipeline will reapply Friday for a federal permit to ship crude oil from the oil sands fields of Alberta to the United States, according to people familiar with the company’s plans.

In January, the Obama administration denied a permit to Trans­Canada, the firm that would build the project, on the grounds that a congressionally mandated deadline of Feb. 21 did not give officials enough time to evaluate the pipeline’s impact. Since then, TransCanada has said it would proceed with plans to construct a segment that did not require a presidential permit — from Cushing, Okla., to Port Arthur, Tex.

The company also unveiled a new route for the pipeline through Nebraska. President Obama, environmentalists and many Nebraskans — including the state’s Republican governor, Dave Heineman — had raised concerns that the project’s original route could imperil Nebraska’s ecologically sensitive Sandhills region, as well as the Ogallala aquifer, a major source of drinking water for state residents.

 

EDUCATION:

OPINION: How the Federal Government Can Promote Innovation (Education Week)

By Patrick McGuinn, Larry Berger, and David Stevenson

The Obama administration’s Race to the Top and Investing in Innovation programs have received tremendous attention for their efforts to prod states into innovative approaches to school reform. These programs from the current administration are not, however, the first federal programs directed at educational innovation. Earlier efforts of previous administrations included the creation of Project Follow Through, New American Schools, the National Science Foundation’s education and human resources directorate, the U.S. Department of Education’s office of educational research and improvement, and the department’s office of innovation and improvement.

The key question for federal policymakers is how to promote and sustain effective innovations and how to bring them to scale to generate systemic improvement. As federal policymakers attempt this, they face a compliance conundrum: A lack of program specificity and oversight can undermine the impact of federal efforts to force change, but too much specificity and oversight can lead to compliance-driven behavior that undermines the idiosyncratic insights and individual convictions that spark innovation. In thinking about the best orientation for the federal government regarding innovation, it is useful to recognize that innovation at the state, district, and school levels depends on various capacities: political, financial, organizational, and technical. As a result of these different capacity needs, the federal government may take a range of possible roles.

OPINION: College Grads Need Jobs, Not a Lower Loan Rate (Wall Street Journal)

By Andrew G. Biggs

President Barack Obama has been on a tour of college campuses touting proposals to lower student loan repayments for college graduates. He hopes to rekindle the enthusiasm of young voters, who in 2008 favored him over Sen. John McCain by more than two-to-one.

Ironically, these same young Americans may suffer most from the administration’s inability to get the economy back on its feet. College graduates who enter the workforce during an economic downturn accept lower wages in lower-quality jobs, and the effects on their income and promotions can last for well over a decade.

All workers face wage cuts and job losses during a recession, when the supply of labor outstrips demand. But in this recession, new college graduates have been particularly hard hit. According to an analysis by the Center for Labor Market Studies at Northeastern University, 54% of bachelor’s degree-holders under age 25, about 1.5 million in total, were jobless or underemployed last year.

 

FOREIGN POLICY:

U.S. Stresses Concessions From China (New York Times)

By Annie Lowrey

American officials said early Friday that their annual summit meeting on strategic and economic issues with China had resulted in tangible economic concessions, despite the unprecedented diplomatic furor over a Chinese human-rights advocate seeking aid from American officials.

The case of the Chinese dissident, Chen Guangcheng, has overshadowed the annual strategic and economic dialogue between Treasury Secretary Timothy F. Geithner, Secretary of State Hillary Rodham Clinton and their high-ranking Chinese counterparts. However, a senior administration official said in a telephone briefing from Beijing that China has gone further than ever in allowing competition with its powerful state-owned enterprises and creating consumption-led growth in its export-focused economy.

The comments from Obama administration officials were aimed at showcasing the progress of the economic talks in the eyes of United States officials as separate diplomatic negotiations continued to resolve the matter of Mr. Chen. Further comments from Chinese economic negotiators are expected later on Friday in Beijing.

For the first time, according to senior American officials, Chinese policy makers said they would commit to removing advantageous financing and regulatory conditions to state-owned enterprises, a significant step forward in the eyes of the Obama administration, the official said, even though such changes might take years to implement.

 

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