Washington Extra – Fears of economic stagnation
Fear returned to global financial markets today, with stocks sinking and the dollar rising sharply on renewed worries about an economic slowdown in China and the United States. President Barack Obama met with senior economic adviser Larry Summers and “talked through some scenarios” on what was playing out around the globe, and how to keep the U.S. recovery on track.
Obama, signing a bill meant to boost U.S. manufacturing, said he was determined to do everything possible to hasten the economic recovery. The problem is – how much more can he do?
Legislation to support small businesses and manufacturing and bolster state finances might be saving jobs, but are unlikely to make much of a difference if American consumers remain reluctant to buy, or if the global economy takes another turn for the worse.
The Federal Reserve may have moved back in the direction of easier monetary policy on Tuesday, but with official interest rates already near zero the central bank fired off its big guns long ago. Nor is the country in the mood politically for another fiscal stimulus through more deficit-spending.
Plenty for the president to ponder, then, as he heads for the Florida Gulf Coast for a brief visit at the weekend, meant to show that the region is ”open for business.” The real vacation comes later, though, with 10 days in Martha’s Vineyard.
Which brings us nicely to my vacation, which starts tomorrow and will be mainly spent on the humble English seaside. Washington Extra will remain open for business, though, thanks to my colleagues in the bureau who have offered to take up the reins. I’ll be back on August 24.
Here are our top stories from today:
Obama signs bill to ease U.S. manufacturers’ costs
President Barack Obama signed a bill aimed at easing costs for U.S. manufacturers by reducing tariffs on materials used to make the products they sell. The bill is part of a “Make it in America” agenda Obama’s Democrats are pushing ahead of the Nov. 2 congressional elections.
To read more of this story by Caren Bohan, click here.
Democrats see good news in primary results
After hearing months of dire political predictions, President Barack Obama’s Democrats took heart from primary results that spared an endangered senator and highlighted Republican Party divisions ahead of November’s elections.
To read more of this story by John Whitesides, click here.
Fast-fading U.S recovery now looks even weaker
U.S. consumers will set the course for a gasping economic recovery that is starting to lose two of its strongest sources of support. Economists have long expected that growth would slow in the second half of this year as government stimulus spending dries up, state and local governments slash outlays, and companies finish restocking lean inventories. What they did not anticipate was that the economy would lose most of its momentum before the year was half over, a surprisingly swift slowdown that prompted the Federal Reserve to rethink its economic outlook and announce more steps to prop up the recovery.
For the full story by Emily Kaiser, click here.
Deutsche unit spurns US for climate investment
Alternative energy investment prospects have shriveled in the United States after the Senate was unable to break a deadlock over tackling global warming, a Deutsche Bank official said. “You just throw your hands up and say … we’re going to take our money elsewhere,” said Kevin Parker in an interview with Reuters.
To read more of this story by Richard Cowan, click here.
U.S., states work to shut down fake healthcare plans
Regulators are cracking down on the growing number of companies that fraudulently sell so-called medical discount plans by telling consumers they work like health insurance and cover medical costs.
To read more of this story by Susan Heavey, click here.
Google-Verizon model could pinch Hollywood
Hollywood players increasingly looking at wireless devices as mini-theaters could be pinched by the policing of Internet traffic as proposed by Verizon and Google. And independent Hollywood, whose shallow pockets couldn’t pay for Internet “fast lanes,” fear they would be hurt more than their bigger competitors as their bandwidth-hogging clips, TV shows and movies would be exiled to an excruciating slow portion of the Internet.
For the full story, click here.
Wider trade gap trims 2nd-qtr growth estimates
The U.S. trade gap widened a surprising 18.8 percent in June on a wave of consumer imports from China and other suppliers, suggesting U.S. second-quarter economic growth was weaker than previously thought.
For Doug Palmer’s full story, click here.
Panel urges big thinking in ‘flash crash’ response
U.S. securities regulators said they are moving forward with technical fixes to the still-unexplained May “flash crash,” but some market players say they want a more wholesale review of high-speed trading. A regulatory advisory committee is still probing exactly what went wrong during the May 6 crash, which sent the stock market plunging 700 points within minutes and is weighing adjustments that aim to prevent a repeat.
For Jonathan Spicer and Roberta Rampton full story, click here.
Clinton pleads with Senate to back Russia arms treaty
Secretary of State Hillary Clinton pleaded with senators to back a new arms control treaty with Russia, saying a delay in ratification could hurt U.S. security and create dangerous uncertainty over broader nuclear control efforts.
To read more of this story by Andrew Quinn, click here.
Pentagon plans advanced Patriot missile sale to Kuwait
The Obama administration told Congress it planned to sell Kuwait the latest production version of Raytheon Co’s Patriot interceptor missile to bolster defenses against a perceived missile threat from Iran.
To read more of this story by Jim Wolf, click here.
FDA panel backs Glaxo, Valeant epilepsy drug
An epilepsy drug from GlaxoSmithKline and Valeant Pharmaceuticals moved closer to the U.S. market as advisers said urinary side effects were manageable.
To read more of this story by Lisa Richwine, click here.
Senate to pass border bill Thursday
The Senate will hold a short special session on Thursday to pass a border security bill, breaking off its summer recess to finish the legislation so it can be sent to President Barack Obama for signing into law. The $600 million measure funding new agents for the U.S. border with Mexico is expected to pass the Senate on a voice vote, spokesmen for both the Democratic and Republican leaders of the chamber said.
To read more of this story by Susan Cornwell, click here.
And some stories from elsewhere in the world…
Florida AG proposes tougher illegal immigrant curbs
Florida Attorney General Bill McCollum proposed tougher curbs against illegal migrants in his melting-pot state which he said would go “one step further” than a similar contested Arizona law. The proposal by McCollum, who is lagging in a race to become the Republican candidate for governor, was certain to thrust Florida into the heated immigration debate that is a major issue ahead of Nov. 2 midterm Congressional elections.
To read more of this story, click here.
Philanthropy becoming new status symbol for US wealthy
As dozens of U.S. billionaires pledge their fortunes to charity and the country struggles to shake off recession, philanthropy is a growing status symbol of the rich, experts say. Being wealthy may no longer be about how many properties or fast cars a millionaire owns — it could be about how much money they are giving away — bringing hope to charities that Warren Buffett and Bill Gates’ philanthropic push inspires others.
For the full story, click here.
For more stories from our Washington correspondents visit www.reuters.com and stay informed.
Take a look, too, at our Front Row Washington Blog.
Photo Credit: REUTERS/Brendan McDermid (A monitor on the floor of the New York Stock Exchange shows the final tally for the Dow Jones Industrial Average, August 11, 2010)