What’s ahead for Washington this week: Avoiding a double-dip

What’s ahead for Washington this week: Avoiding a double-dip

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, August 29 – Speaking at the annual Economic Symposium in Jackson Hole Friday, Fed Chairman Ben Bernanke said that compared to a year ago, “for much of the world, the task of economic recovery and repair remains far from complete. In many countries, including the United States and most other advanced industrial nations, growth during the past year has been too slow and joblessness remains too high. Financial conditions are generally much improved, but bank credit remains tight; moreover, much of the work of implementing financial reform lies ahead of us. Managing fiscal deficits and debt is a daunting challenge for many countries, and imbalances in global trade and current accounts remain a persistent problem.”

Bernanke acknowledged that “The prospect of high unemployment for a long period of time remains a central concern of policy.” That's the last thing the Obama administration wants to hear as the November mid-term elections approach, with near 10% unemployment virtually guaranteeing that Democrats will lose a significant number of seats in both the Senate and House. The only relatively good news from the Fed Chairman was that the Fed has “some additional policy options that we could consider, especially if the economic outlook were to deteriorate further . . . Notwithstanding the fact that the policy rate is near its zero lower bound, the Federal Reserve retains a number of tools and strategies for providing additional stimulus . . . Should further action prove necessary, policy options are available to provide additional stimulus.”

All of which raises expectations that rather than wait for the slow-moving Fed, President Obama will announce dramatic new stimulus efforts of his own this week to avoid the double-dip recession that an increasing number of observers are forecasting. Tellingly, Obama interrupted his Martha's Vineyard vacation this past week to attend a series of economic briefings with key advisors. And this week kicks off with more White House meetings on the troubled U.S. economy.

The economic worries add to the pressure on the Senate to break its legislative logjam when work resumes Sept. 14 after the summer recess. But Sept. 14 is a long way away – and after the latest Republican primaries, Republicans are sounding more determined than ever to continue their opposition to the Democrats' legislative objectives.

Over the weekend, Housing & Urban Development Secretary Shaun Donovan added to expectations that the administration will announce further stimulus measures. He explained in a CNN “State of the Union” interview that “in addition to the tools we already have in our toolbox, we're going to be launching in the next few weeks two additional tools that are critical. One is we're going to be rolling out an FHA refinancing effort to help borrowers who are under water in their homes get above water. And, second, we're launching an emergency homeowners' loan program for unemployed borrowers to be able to stay in their homes.”

This week provides an opportunity for the White House to hog the spotlight since Congress remains out of town for its summer break, with no hearings planned before it returns to DC on September 14.

USDA’s Economic Research Service & National Agricultural Statistics Service reports: