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The Economy, Emissions and Expectations

May 30, 2014

Anticipation, or perhaps apprehension, is rising about President Obama's announcement on Monday of new emissions rules for power plants. Meanwhile, the economic news has been not good. What we're reading ... with a measure of trepidation.

Reuters, "For first time in 3 years, U.S. economy shrinks":

The U.S. economy contracted for the first time in three years in the first quarter as it buckled under a severe winter, but there are signs it has rebounded and economists say it could grow as much as 4 percent in the current quarter.

The Commerce Department on Thursday slashed its estimate of gross domestic product to show the economy shrank at a 1.0 percent annual rate.

The worst performance since the first quarter of 2011 reflected a far slower pace of inventory accumulation and a bigger than previously estimated trade deficit.

Associated Press, "Consumer spending drops for first time in a year":

WASHINGTON (AP) — U.S. consumers cut back on spending in April for the first time in a year, taking an unexpected pause after a big jump during the previous month. The results, however, are unlikely to derail an expected spring rebound in the economy.

Consumer spending, which accounts for 70% of overall economic activity, fell 0.1% in April, the Commerce Department said Friday. The drop was the first in 12 months. But it followed a 1% surge in spending in March, which marked the biggest increase in more than four years.

And a healthy expansion is anticipated for the second quarter. Still, a depressing column from earlier this month, "Gallup CEO: They say the U.S. economy is rebounding - they're wrong."

As for the emissions rules and other regulatory matters ...

Los Angeles Times, "Obama to target power plants' carbon dioxide emissions."

CHICAGO — On Monday, President Obama plans to unveil what is likely to be the most significant initiative of his presidency to combat climate change: a new rule to cut carbon dioxide emissions from existing power plants, the country's single greatest source of the heat-trapping gas.

In Washington, the announcement, which would bypass Congress and use Obama's authority under the Clean Air Act to achieve greenhouse gas reductions, will stir threats of lawsuits, claims of job losses and charges that the president has revived his "war on coal."

Bypassing Congress, the legislative body responsible for setting policy? Marlo Lewis of the Competitive Enterprise Institute considers the implications in an op-ed, "EPA: The Obama administration’s new legislative branch."

The Administration is asking the public to withhold judgment until the rules are actually announced. Fair enough. But then again, there's much pre-spinning of the release. Best to get the debate going ...

Etc. Just do a news search for "Obama and emissions" and you can catch up. 

We close with a new study from our friends at the U.S. Chamber of Commerce, "Energy Institute Report Finds That Potential New EPA Carbon Regulations Will Damage U.S. Economy." The EPA pushes back here.

Still ... withholding judgment. We'll see on Monday.

UPDATE (2 p.m.) EPA Administrator Gina McCarthy, not President Obama, will make the announcement. 

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