Unboxed: More Data Can Mean Less Guessing About the Economy

Other than their owners, most small businesses have no employees. His is one of the 4.3 million that do have them, and that employ fewer than 20 people each. And while these companies collectively produce roughly 15 percent of the nation’s economic output, their activities aren’t captured by the official numbers in a timely or detailed way.

Yet this measurement shortfall in the small-business sector, and a series of other information gaps in the economy, may be overcome by what experts say is an emerging data revolution — Big Data, in the current catchphrase. The ever-expanding universe of digital signals of behavior, from browsing and buying on the Web to cellphone location data, is grist for potential breakthroughs in economic measurement. It could produce more accurate forecasting and more informed policy-making — more science and less guesswork.

“We’re seeing the emergence of new sets of data and knowledge that we’ve never had before,” says James Poterba, president of the National Bureau of Economic Research and a professor at the Massachusetts Institute of Technology. “It’s a real opportunity for policy makers.”

In the small-business case, Mr. Tabor’s company, American Home Inspectors and Engineering Assessments Inc., is one of more than 200,000 that have allowed Intuit, the software maker, to gather data on their use of Intuit’s online payroll or online accounting products for research on employment and sales trends. The data are stripped of identifying information, and, in asking permission, Intuit also emphasizes that it uses the data to improve its products.

Mr. Tabor said he had no qualms about contributing his anonymized data. “I’m happy they use the data for research and to make their services better,” he says.

Intuit began its research in 2004 on small businesses and has expanded its scope, including many more companies and becoming more fine-grained in its data tracking as it has added products, services and customers.

Researchers at the Bureau of Economic Analysis, the government’s statistical scorekeeper of economic activity, are now experimenting with the Intuit data, seeking to tap it to improve the official estimates.

“The promise of new data sources, like Intuit and others, is more accurate, more timely and cheaper data for monitoring the economy,” says Steve Landefeld, director of the bureau. “That could be a really big step forward.”

National income accounting emerged in the Great Depression, in an effort to bridge the economic information gap of its day. In June 1930, based on scattered reports available to him, President Herbert Hoover declared, “The Depression is over,” when in reality conditions were quickly worsening.

The main tool for government statistics remains telephone and in-person surveys of households and businesses — surveys that are costly and time-consuming.

Tracking behavior online can pull in far more data, more quickly — so that governments should be able to see signs of inflation, deflation and employment trends sooner and adjust policy faster.

For example, the Intuit monthly employment data, based on online monitoring, is current. That is eight months to a year ahead of the government’s best statistical look at the health of small business, which is culled from quarterly surveys, state unemployment records and tax returns. The monthly Intuit survey data have also proved accurate, almost mirroring the government results when they are finally reported, according to Susan Woodward, a consulting economist for Intuit.

“Whatever is happening, it is better to know sooner,” Ms. Woodward says.

Yet whether more data, collected faster, will improve economic forecasting is uncertain. So far, the results are mixed. An encouraging study, begun in 2009 and repeatedly updated, has used Google searches to predict home sales and prices three months into the future. In the study, the higher the frequency of search terms like “house prices,” “real estate agent” and “mortgage rates,” the more likely the national housing market would heat up.

The results of the study, “The Future of Prediction,” by Lynn Wu, an assistant professor at the Wharton School of the University of Pennsylvania, and Erik Brynjolfsson, a professor at the M.I.T. Sloan School of Management, have held up over time. In the most recent version, their model using search data predicted future home sales 24 percent more accurately than the forecasts by experts from the National Association of Realtors.

But another major project using Google search terms points to the limits of such techniques: Google Flu Trends uses the same methods as Big Data-style economic prediction, although it focuses on public health.

The service monitors flu-related search terms and seeks to predict the incidence of flu, ahead of official statistics based on doctors’ reports to the Centers for Disease Control and Prevention. In 2009, with the outbreak of H1N1 flu, Google Flu Trends was prescient.

Rupee Drops on Weakness in Indian Economy

MUMBAI — The Indian rupee began slipping lower again in currency markets on Monday after a two-day respite late last week, as further signs emerged of broad troubles in the Indian economy.

An HSBC survey of purchasing managers at manufacturers across India, released Monday, showed them to be the gloomiest they had been since March 2009, at the bottom of the global economic downturn. Businesses across the country are bracing themselves for a sharp increase in the regulated price of diesel fuel, as the rupee’s steep drop in August has driven up the Indian price of crude oil, priced in dollars and almost entirely imported.

After staying nearly steady through the morning, the rupee began sliding again by early afternoon and by late afternoon was down another 0.5 percent against the dollar, to 66.08 rupees to the dollar, bringing its losses since early May to almost 20 percent. Currency traders said that they perceived hints of modest intervention to cushion the decline by the Reserve Bank of India, the country’s central bank, which acts through state-controlled commercial banks when it does intervene so as to camouflage its activity.

The Mumbai stock market showed signs of recovery on Monday, with the benchmark Sensex index rallying 1.43 percent by late afternoon.

Some economists say that the economic downturn may prove sharp but brief. Ajay Singh, a professor at the National Institute of Public Finance and Policy, predicted that exporters would benefit considerably from a cheaper rupee and would soon start expanding output.

Yet poor roads, restrictive labor laws and heavy regulation have left India with a manufacturing sector that, although stronger than a decade ago, still struggles to compete with China and other East Asian economies. Indian companies rely heavily on imports for materials and equipment that they cannot buy within India, and the costs of those imports are surging as the rupee falls, limiting gains in Indian competitiveness.

At Challenge Overseas, a manufacturer of trousers on the northern outskirts of Mumbai that exports mainly to the Mideast, the floor and corners of the factory were piled high over the weekend with thick gray and black rolls of fabric two meters, or six feet, long and 30 centimeters, or 12 inches, thick. But all of the fabric had been imported from China.

“Our owner goes to China every three months,” said Javeri Savia, the general manager of production. “The newer textures and weaves all come from China.”

Like many Indian factories, Challenge also lacks economies of scale: It has just 60 workers to cut, sew and iron its trousers, which sell at wholesale for about 1,000 rupees, or $15, apiece. Similar factories in China often employ several thousand workers. “When you compare with China and all of them, we are peanuts,” Mr. Savia said.

The rupee traded between 52 and 55 to the dollar until early May, when it began a gradual slide that the Indian government tried to arrest through market intervention and other measures, including raising the tax on gold imports. The rupee continued drifting down through the summer, then began falling faster in mid-August when senior government officials made it clear in speeches that they were reluctant to resort to more drastic measures to arrest the rupee’s decline, like sharp increases in interest rates or an imposition of stringent controls on moving large sums of money in and out of the country.

The rupee briefly nose-dived last Wednesday to almost 69 to the dollar, prompting the Reserve Bank of India to supply dollars from its reserves through a local bank to the country’s state-controlled oil refiners and distributors, who tend to be India’s biggest buyers of dollars so as to pay for crude oil imports. The rupee slowly crawled back above 66 to the dollar on Thursday and Friday before drifting down a little on Monday.

Paritosh Mathur, the head of fixed-income and currency trading in India for Deutsche Bank, said that volatility in the rupee’s value appeared to be diminishing. He said that he saw little chance that the rupee would return to its levels of last spring in the next two or three months, but also little chance that it would test again the lows of last Wednesday.

The HSBC index of purchasing managers’ sentiment fell to 48.5 in August, from 50.1 in July. A figure below 50 indicates a contraction in activity. Overall new orders and new export orders both declined. Purchasing managers also indicated that they were buying less material for future production and were keeping smaller inventories of finished goods on hand, apparently in anticipation of weak sales.

Leif Eskesen, HSBC’s chief economist for India and southeast Asia, cut his forecast for Indian economic output to 4 percent for the Indian fiscal year through the end of next March, from a previous forecast of 5.5 percent. He also cut his forecast for the following fiscal year to 5.5 percent, from 6.6 percent.

“The recovery is likely to prove protracted as confidence will only return reluctantly and the structural reforms will only pass through to growth very slowly,” he said in a research report.

Julian D’Souza, the South Asia director in the Mumbai office of the Conference Board, a group based in New York that issues leading economic indicators, said that many manufacturing industries were hobbled by high transport and electricity costs. But auto parts factories tend to have modern equipment and good locations close to ports.

“That’s one area where India can start exporting,” he said.

American and European auto parts makers are already facing heavy competition from China, however, so further exports from India might fan trade tensions.

Neha Thirani Bagri contributed reporting.

Rebound in Trade Hints at Stability in China Economy

HONG KONG — China’s trade rebounded in July in a possible sign that its economy is stabilizing after a slowdown over the last year.

The improvement offers small but encouraging hope for China’s leaders, who are struggling to arrest a downturn that dragged growth to a two-decade low in the latest quarter.

China’s exports rose 5.1 percent in July from a year earlier and imports were up 10.9 percent, according to customs data. China is the world’s second-largest economy, after the United States.

Economists had expected trade to grow after it shrank in June, but the rate of growth surpassed expectations.

China’s politically delicate global trade surplus narrowed to $17.8 billion.

Economists said the surge in imports suggested that domestic demand was holding up, a major goal for China’s policy makers, who are trying to reduce the economy’s dependence on trade and investment in favor of more self-sustaining domestic consumption.

Imports of iron ore, an important commodity used to make steel, surged 24 percent by volume, while copper imports grew 12 percent. Both figures were the fastest rates in more than a year, said Yao Wei, China economist at Société Générale.

She said the return to growth was a sign of “some stabilization in external demand, at best — not yet a solid recovery.”

Analysts said the figures were a sign of improvement but cautioned about reading too much into a single set of numbers.

“July seems to reflect a return to a normal, relatively uninspiring trend after a weak June, rather than the beginning of acceleration in growth,” said Alistair Chan, an economist at Moody’s Analytics. “While the worst seems to be over, the upturn will be relatively flat.”

Chinese leaders are facing pressure to meet a goal of 7.5 percent growth for the year, which is far stronger than the forecasts for the United States, Europe and Japan, but would be the country’s weakest performance since 1991.

Exports to the United States, China’s biggest foreign market, edged up 2.3 percent, leaving a trade surplus of $19.1 billion. Exports to the 27-nation European Union shrank 2.8 percent, for a trade gap of $10 billion.

Iran’s President Puts New Focus on the Economy

In an acknowledgment of the growing toll that international economic restrictions connected to Iran’s nuclear program are having on the population, both Mr. Rouhani and Ayatollah Khamenei made the economy a major theme of their remarks.

“People called for change and improvement in their living standards, they want to live better,” Mr. Rouhani said.

But he and the ayatollah offered somewhat different solutions. Whereas Mr. Rouhani said that interactions with the world, meaning talks with Europe and potentially the United States, were a way out of the crisis, Ayatollah Khamenei, who as supreme leader has final word on all important issues, expressed pessimism that such overtures would yield fruit. “Some of our enemies do not speak with our language of wisdom,” he said, urging self-sufficiency.

As Mr. Rouhani takes his public oath of office on Sunday, Iran’s growing economic crisis sits atop his agenda. Sanctions have slashed oil exports and limited Iran’s ability to transfer money from abroad. The shortage has been aggravated by the profligate spending that is a legacy of the departing government of Mahmoud Ahmadinejad.

During most of Mr. Ahmadinejad’s two four-year terms, Iran enjoyed an oil windfall, with a flow of dollars and euros that fueled huge imports on goods ranging from ice cream to Porsches.

But now Mr. Rouhani’s aides describe Iran’s economic situation as the worst in decades. Many blame what they call Mr. Ahmadinejad’s erratic economic policies, punctuated by slashed subsidies and unbridled inflation.

The signs of woe abound.

Lacking money, Iran’s national soccer team scrapped a training trip to Portugal. Teachers in Tehran nervously awaited their wages, which were inexplicably delayed by more than a week. Officials warned recently that food and medicine imports have stalled for three weeks because of a lack of foreign currency.

While Mr. Rouhani has asked for a hundred days to review the state of the economy and devise solutions, there are some voices who now say that the only way to solve the economic ills is to come up with a political settlement of Iran’s nuclear dispute. Those voices were barely heard during Mr. Ahmadinejad’s tenure.

“Rouhani’s economic success depends on the determination of Iran’s other leaders to find a solution for the nuclear support,” an economics professor, Mohsen Renani of the University of Isfahan, told the Web site Neco News.

In another sign of dissatisfaction over the consequences of Iran’s nuclear stance, an influential political professor publicly expressed doubt recently over the benefits of the nuclear program. “Why are we producing radioisotopes when we can import them much cheaper?” the professor, Sadegh Zibakalam of Tehran University, told the reformist weekly Aseman. “Why should we maintain a nuclear program when we have no economic justification?”

While those voices may have grown louder, they by no means represent the official position of Iran’s ruling establishment, which maintains that self-sufficiency in nuclear energy is nonnegotiable.

“Whatever happens, our nuclear stances will not change nor waver,” Mohammad Taghi Rahbar, a former member of Parliament and an influential Friday Prayer leader in Isfahan, said in an interview. “Our supreme leader, the nation and all officials from all factions believe this is our inalienable right, so we will not retreat at all.”

But ignoring the increasing economic pressures, while promising a better future — a strategy favored by Iran’s leaders over the past years — is proving increasingly complicated. Almost everybody in Iran is feeling the pain.

Strategies: Elastic Numbers Make It Hard to Get a Handle on the Economy

Yet the deluge of statistics did little to clarify an urgent question: How strong is the economy right now?

It’s a basic issue — one that affects the life of every American, the policy decisions of the Federal Reserve, the strategies of businesses and the performance of the markets. Unfortunately, the answer is by no means clear.

There are plenty of fresh numbers, though. On Friday morning, the Labor Department said the unemployment rate dropped in July to 7.4 percent, from 7.6 percent the previous month, and a total of 162,000 new nonfarm payroll jobs were created.

This is good news, but perhaps not as good as it seems. Even at 7.4 percent, unemployment remains uncomfortably high, and the government on Friday also revised downward job creation numbers for the previous two months, from 195,000 per month, to 176,000 for May and 188,000 for June. The Fed, acknowledging things are not as good as they could be four years after a major recession, reaffirmed its loose monetary policy. That policy, based on the assumption that the economy still needs emergency support, has helped hold interest rates to relatively low levels, and helped propel the stock market to new highs last week.

Gross domestic product numbers released on Wednesday also suggested that the economy was still ailing. In the second quarter of 2013, the Bureau of Economic Analysis said, the growth rate of G.D.P. was 1.7 percent, on a seasonally adjusted, annualized basis. That’s just a preliminary number, subject to extensive revision. For the first quarter, the bureau now says G.D.P. grew at a 1.1 percent rate — after a series of reductions from its initial estimate of 2.5 percent.

But how weak is the economy? The numbers don’t appear to fit a coherent pattern. Even with the downward revisions in the labor figures, the current level of job creation is greater than would typically be expected from a weak economy. The lackluster G.D.P. picture is hard to reconcile with the decline in the unemployment rate we’ve been seeing, said Joseph G. Carson, director of global economic research at AllianceBernstein. “During similar tepid growth environments in the past, unemployment has sometimes even increased rather than declined,” he said.

Something’s wrong with the numbers. “Growth in the private sector, which has been running at 3.3 percent, probably helps to explain the drop in the jobless rate,” he said. He believes the overall G.D.P. figures aren’t yet really capturing reality and that it’s likely that G.D.P. growth over the last two years has actually been stronger than reported. Mr. Carson is optimistic about the second half of this year. “I think the economy will be picking up, and the numbers will start to show that.”

The numbers are remarkably malleable, as the Bureau of Economic Analysis demonstrated last week.

In addition to the normal range of monthly and weekly economic reports, the bureau issued an ambitious revision of its statistics, adjusting a vast range of figures going back more than 80 years. Its revision showed that the recent recession was a little less severe than earlier reported, and the recovery has been a bit stronger. The economy shrank at an average annual pace of 2.9 percent, not 3.2 percent, in the recession that started in December 2007 and ended in June 2009. And from the recession’s end through 2012, the economy grew at an average annual rate of 2.2 percent, not 2.1 percent as previously published.

Those numbers would still classify the recession as the worst since World War II, and the recovery as the weakest. Further revisions will be made as needed, and, given the anomalies in the current data, it seemed likely that some future changes will be significant. Ben S. Bernanke, the Fed chairman, alluded to this possibility in Congressional testimony last month.

“We all should keep in mind that these are very rough estimates and they get revised,” Mr. Bernanke said. “For example, you get somewhat different numbers when you look at gross domestic income instead of gross domestic product.”

IN theory, G.D.I. and G.D.P. should be equal. One measures gross income, the other gross production, and as a matter of basic accounting they ought to match. But they don’t, not in real time, because they are collected from different sources using different deadlines and definitions. G.D.P., for example, depends heavily on sales receipts, while G.D.I. relies on data from paychecks, which are often issued well after sales are made, said J. Steven Landefeld, director of the bureau. “G.D.I. and G.D.P. are both the bureau’s children,” he said. “We’re proud of both, and we know they’re different.”

Early G.D.I. numbers have provided a better indicator of cyclical changes in the economy — of the onset and the end of the last recession, in particular — than have early readings of G.D.P., according to research by Jeremy J. Nalewaik, a Fed economist.

What are the G.D.I. numbers telling us now? It depends on how you look at them. The Economic Cycle Research Institute, an independent forecaster, said that the economy fell into another recession “sometime in the middle of 2012 and it is still in a recession now,” according to Lakshman Achuthan, the institute’s chief operations officer. He relied in part on G.D.I. data. But the vast majority of mainstream economists reject this interpretation, and Mr. Landefeld said G.D.I. numbers might sometimes exaggerate economic trends.

The G.D.P. and G.D.I. numbers available right now indicate that the economy is growing, but Mr. Achuthan said that the historical revisions made last week “are a reminder that these numbers are all a moving target, and that they will change.”

Mr. Carson of AllianceBernstein is far more sanguine, saying the economy appears to be growing modestly. But he agrees that the data isn’t allowing clear visibility. “We’ve gotten so many new numbers,” he said. “They help a bit. Now the past has become a little less foggy, but as for the present, there’s still plenty of fog to go around.”

U.S. Economy Grew 1.7% During the 2nd Quarter, Topping Forecasts

The mixed picture facing the country was evident on Wednesday, as the Commerce Department reported that the economy, adjusted for inflation, expanded at a better-than-expected annual rate of 1.7 percent in the April-June quarter, even as inflation-adjusted growth in the first part of the year now appears slower than first thought. In a separate statement after a two-day meeting of policy makers at the Federal Reserve, the central bank said the economy was on a “modest” trajectory but gave no clue as to when it might start tapering back its huge stimulus efforts.

Like economists and traders, as well as the 12 million unemployed Americans looking for work, the Fed is struggling to gauge whether better growth does indeed lie ahead.

Optimists point to improved levels of job creation in recent months, a more robust housing sector and a surging stock market that has lifted the value of investment and retirement accounts for millions of consumers. Pessimists focus on the fact that the estimated economic growth rate of about 1.4 percent so far in 2013 is well below last year’s levels of 2.8 percent, even as automatic cuts in federal spending and higher taxes continue to bite.

There were pockets of strength in Wednesday’s data from the Bureau of Economic Analysis, all of which will be subject to further revision as the Commerce Department gathers more information about the economy. For example, residential fixed investment increased by 13.4 percent, a sign that housing continues to rebound. Personal consumption rose 1.8 percent, as consumers showed some resiliency, especially given the increase in payroll taxes at the beginning of 2013.

Additionally, government experts have introduced the first comprehensive change in four years in how the economy is measured. They revised figures all the way back to 1929, while also restating more recent data to show that the 2007-9 recession was slightly milder than originally estimated and growth in 2012 was a bit better.

Still, economists emphasized that although the economy’s performance in the second quarter was significantly stronger than had been feared — Wall Street experts forecast growth would come in at just under 1 percent — big challenges remain.

“The basic story of a deep recession followed by a lackluster recovery is essentially unchanged,” said Nariman Behravesh, chief economist at IHS. Growth in the current quarter, which wraps up at the end of next month, remains a wild card, he added. IHS and other companies do expect a pickup in the second half of 2013, but more fallout from the fiscal tightening in Washington could still be felt, he cautioned.

“So far the effects have been fairly muted,” Mr. Behravesh said. “We’re puzzling over that.”

Were it not for the federal cuts, growth would have been close to 2 percent in both the first and second quarters, said Steve Blitz, chief economist at ITG Investment Research. But that’s about the best Americans can hope for, he said, at least in 2013.

“I don’t see the economy breaking away from that 2 percent rate for now,” Mr. Blitz said. He is more optimistic about 2014, when he said he thought the annual rate of growth could rise to about 3.5 percent. “The economy will have adjusted to the downshift in federal spending by then, and Europe won’t be decelerating as rapidly, nor will China and Japan,” he said.

The pace at which spending by the federal government is dropping stabilized last quarter. It fell by 1.5 percent, compared with an 8.4 percent decrease in the first quarter of 2013 and a 13.9 percent plunge in the final quarter of 2012.

More clues about the economy’s performance will come on Friday, when the Labor Department reports on monthly job creation and the unemployment rate. Economists estimate the economy created 185,000 jobs in July, according to a Bloomberg survey, a bit below the 195,000 level in June, with the unemployment rate falling to 7.5 percent, from 7.6 percent.

Economix Blog: An Economy Stuck in Second Gear

For Obama, Another Round With the Economy

It may also be a reflection of how little the president — any president — can do to alter the country’s economic trajectory while he is faced with global forces that shape the financial system in the United States, as well as a domestic political system that has ground to a standstill, particularly over economic issues like taxes and spending.

The new public relations effort, which begins with a major address Wednesday and as many as six economic-themed speeches over the next two months, is intended to give Mr. Obama a chance to claim credit for the improving economy and to lift his rhetoric beyond the Beltway squabbles that have often consumed his presidency.

But the speeches will not contain big new proposals, senior administration officials said Monday, speaking to reporters on the condition that they not be quoted. Nor are they designed to break the hardening stalemate on economic issues between a president and his Republican adversaries in Congress. Instead, they will repackage economic proposals that the president has offered for years — sometimes in new formats, the officials said.

“The point is to chart a course for where America needs to go,” Dan Pfeiffer, the president’s senior adviser, said in an e-mail to the president’s supporters Sunday night. Officials said that course has improved significantly during Mr. Obama’s administration, giving Americans a sense of stability, if not complete economic security.

Mr. Obama’s adversaries on Monday were quick to point out that the president has frequently launched similar efforts to redefine or restate his economic agenda, often accompanied by rhetoric from his advisers about a new direction or emphasis. Most have run headfirst into opposition on Capitol Hill.

In the fall of 2011, Mr. Obama addressed a joint session of Congress to unveil a $447 billion jobs bill that has not passed. In 2012, as his re-election campaign neared its end, Mr. Obama renewed his vision with a 20-page economic plan. In his State of the Union speech in February, the president refocused on the economy after beginning his second term focused on gun control, immigration, climate change and gay rights.

And just this past May, Mr. Obama announced he was restarting his “Middle Class Jobs and Opportunity Tour,” with stops in Baltimore and Austin.

“They’ve been saying the same thing for four years,” said Don Stewart, a spokesman for Senator Mitch McConnell, the minority leader in the Senate. “The previous Democrat Congress passed his agenda — Obamacare, the stimulus, thousands of pages of regulations — and the economy is treading water. More taxes, more regulation, and more failures to unleash American energy jobs are not the answer.”

Republicans say Mr. Obama should have spent less time passing health care legislation early in his presidency and more time improving the economic fortunes of Americans.

“Memo to Obama and the White House: speeches don’t create jobs,” said Kirsten Kukowski, a spokeswoman for the Republican National Committee.

Senior administration officials on Monday conceded that the president was partly to blame for the Washington conversation veering away from the economic issues that many Americans believe are the most important. One official said that it was incumbent on Mr. Obama to shift the overall focus of the debate in Washington, and that has not happened.

In some cases, the White House has chosen to spend its time and political capital on other topics. Mr. Obama made it clear early this year that he wanted Congress to make a major push to pass an overhaul of the nation’s immigration system. The president also responded to the shooting of 20 children at Sandy Hook Elementary School by calling for broad new gun laws. His allies argue that the health care law and an immigration overhaul will help the economy, and they blame Republicans for blocking many of Mr. Obama’s economic policies.

But officials also criticized Republicans, especially in the House, for seizing on what the White House says are overblown scandals: the targeting of nonprofit groups at the Internal Revenue Service and the actions of officials in the wake of the attacks in Benghazi, Libya.

And they noted that some of the distractions in Washington have been out of Mr. Obama’s control. When oil spilled from the Deepwater Horizon well in the Gulf of Mexico in the summer of 2010, it consumed the White House for weeks. Hurricane Sandy’s destruction late last year and the tornadoes in Oklahoma City in May required presidential attention, as did tensions in the Middle East. Even the verdict in the Trayvon Martin case prompted presidential remarks on Friday.

Administration officials said the timing of the speeches was broadly related to the looming fiscal deadlines that are likely to spark bitter fights in Congress later this fall. Republicans are already promising big fights over extension of the nation’s debt limit and new budget battles.

But Mr. Obama’s aides said that the president wanted to avoid using the speeches as a negotiating platform over legislative programs. They said he would talk about housing, jobs, education, retirement and health. But they cautioned reporters not to expect a Congressional to-do list from Mr. Obama.

That decision is driven, the president’s top aides said, by a conclusion that there are no magic answers that will accelerate the economy’s recovery or help provide jobs to the millions of people who are still having trouble finding one.

Administration officials said they hoped Mr. Obama’s speeches would help frame the contours of a conversation that was broader than the Congressional debates in Washington, in part by reaching out to Americans, business owners and others.

McDonald's Signals Weak 2013 as U.S. Rivals, Europe Economy Bite

The world's biggest restaurant chain by sales reported a lower-than-expected quarterly profit and said it expects global same-restaurant sales in July to be relatively flat, sending its shares down almost 3 percent in midday trading.

"Based on recent sales trends, our results for the remainder of the year are expected to remain challenged," Chief Executive Don Thompson said in a statement.

Wall Street analysts had expected McDonald's business to pick up in the middle of this year as food inflation and other pressures ease.

"I would have liked to have seen them be a little more positive on things," Edward Jones analyst Jack Russo said.

The latest quarterly results from the seller of Big Mac hamburgers, french fries and Happy Meals heaps pressure on Thompson, who was promoted to the CEO position in July 2012, when the chain was enjoying a multi-year run of rising sales and profits.

Still, Russo said Wall Street would likely give the well-regarded McDonald's CEO a pass for a bit longer: "I don't see an operator in the United States or Europe really tearing it up."

Graphic on McDonald's results: http://link.reuters.com/xut79t

In the second quarter ended June 30, global sales at McDonald's restaurants open at least 12 months rose 1 percent, in line with analysts' expectations.

McDonald's said second-quarter same-restaurant sales in the United States were up 1 percent, missing the average analysts' forecast of a 1.5 percent increase.

The company is fighting to boost sales as smaller U.S. rivals such as Wendy's Co and Burger King Worldwide Inc debut attention-grabbing food, like bacon sundaes and limited-time offers.

Shares of McDonald's were trading at down 2.8 percent at $97.45, while stock in Wendy's was up 1.1 percent at $6.76.

Wendy's, known for its thick Frosty shakes and square hamburgers, recently launched a Pretzel Bacon Cheeseburger that appears to be chain's best-selling new product in at least a decade.

"This pressure on McDonald's could last over the third quarter as a whole, and perhaps beyond, if Wendy's adds its Pretzel Bacon Cheeseburger as a permanent menu item - which looks increasingly likely," Janney Capital Markets analyst Mark Kalinowski said.

McDonald's, which still dominates the fast-food industry, has been offering late-night breakfasts, tweaking other menus and advertising value-priced meals to bring in more traffic.

The chain said its indulgent new line of Quarter Pounder hamburgers - including a bacon habanero ranch version - have performed well. It recently axed lackluster sellers like premium Angus burgers and its Fruit & Walnut Salad while also catching up with rivals by introducing an egg white version of its popular McMuffin breakfast sandwich.

In Europe, same-restaurant sales were down 0.1 percent in the quarter - the third consecutive quarter of declining sales in the region. In the Asia/Pacific, Middle East and Africa (APMEA) region, second-quarter sales fell 0.3 percent.

Analysts polled by Consensus Metrix had forecast declines of 0.1 percent in Europe and 0.2 percent in APMEA. They expect Wendy's to report a 1.1 percent gain in second-quarter sales.

McDonald's second-quarter net income rose 3.7 percent to $1.40 billion, but earnings per share of $1.38 missed analysts' estimate by 2 cents, according to Thomson Reuters I/B/E/S.

Nevertheless, McDonald's executives said the chain is gaining share in the so-called informal eating out category, which is dominated by fast-food operators. Still, they warned that significant coupon and voucher discounting is keeping them from raising prices to offset higher costs.

Bill Smead, a portfolio manager at the Smead Value Fund in Seattle, holds shares in McDonald's and is betting the iconic and well-run chain will see better days ahead.

The company is in a normal down cycle after benefiting when the global recession forced cash-crunched diners to trade down to McDonald's from pricier chains to save money. It also got a big bump from profit-boosting new drinks like lattes and smoothies, he said.

"McDonald's is an emotional and legal addiction in many cases. You went there, your kids go there, your grandkids go there," Smead said.

(Reporting by Siddharth Cavale in Bangalore and Lisa Baertlein in Los Angeles; Editing by Saumyadeb Chakrabarty, Robin Paxton and Sofina Mirza-Reid)

Putin Puts Pensions at Risk in $43 Billion Bid to Jolt Economy

Mr. Putin’s proposal to dip into the country’s pension reserves for loans of up to $43.5 billion for three big infrastructure projects provoked an immediate debate among some of Russia’s top financial minds. It also brought warnings from financial experts who said that it might produce a burst of inflation, and that what the Russian economy needed most was deep structural change, to diversify from oil and gas and to build investor confidence.

Mr. Putin, now in his 13th year as Russia’s political leader, made the stimulus plan the centerpiece of his speech at an annual economic forum here that serves as a gathering of the country’s top financial officials, business leaders and foreign investors. Slowing growth has been the obsessive topic this year.

In his speech, Mr. Putin said Russia would distribute the reserves as loans to modernize the storied Trans-Siberian Railway, which runs between Moscow and Vladivostok in the Far East; to construct a 500-mile high-speed rail line between Moscow and Kazan, the capital of the Tatarstan region; and to build a superhighway ringing Moscow.

“Our key challenge in the coming years is to remove many infrastructure constraints that literally stifle our country and prevent unlocking the potential of entire regions,” Mr. Putin said. “Investors are hugely interested in infrastructure projects, especially if the state is ready to provide guarantees, minimize the risks and act as a co-investor.”

The Russian economy has been strong in recent years, functioning almost at full capacity, largely because of high energy prices, which helped build up the country’s reserve funds. But with nearly full employment, new government spending is more likely to cause wage inflation than to create new jobs, experts say. Instead, they add, Russia needs to review manufacturing, create new industries and attract foreign capital.

While not the headline measure in Mr. Putin’s plan, the amnesty proposal was by far the most surprising item. It was the brainchild of Mr. Putin’s business ombudsman, Boris Titov, who has championed it as a means to improve the business climate.

“The period that just passed was not the best for defenders of property rights,” Mr. Titov said last week in an interview.

In 2000, when Mr. Putin came to power, the government re-examined many of the early post-Soviet privatizations, which were widely regarded as fraudulent, and later imprisoned the richest man in Russia at the time, Mikhail B. Khodorkovsky, on charges of tax evasion and fraud that many critics said were trumped up.

Taking a cue, police and Federal Security Service officers set about seizing businesses large and small throughout Russia from unpopular or unlucky businessmen, and often, in an Orwellian manner, emerging as the owners themselves.

In fact, police officers who seize businesses are common enough in Russia to have earned the nickname “werewolves in epaulets.”

The intention of the amnesty plan is to free thousands of run-of-the-mill businessmen caught up in this turmoil, while avoiding the high-profile and politically tinged cases, like those of Mr. Khodorkovsky, who is not expected to be freed.

Mr. Titov said that 110,000 people were serving prison time for economic crimes, and that 2,500 others were in pretrial detention. The draft of the amnesty bill, Mr. Titov said, covers 13,000 of them.

“This initiative will on the whole strengthen the trust of citizens” in the business community, Mr. Putin said in his speech. “I am certain the development of the state is possible only under conditions of respect for private property, to the values of economic freedom and the work and success of entrepreneurs.”

More broadly, though, the intention of Mr. Putin’s amnesty, Mr. Titov said, is to signal to the business community an easing police pressure. It is, he said, “a very positive, a very good signal for Russia, and that is important as in Russia. We don’t often have good signals.”

Britain Must Do More for Economy, I.M.F. Warns

LONDON — Britain should do more to fuel economic growth and be prepared to pump more money into its bailed-out banks if necessary, the International Monetary Fund said Wednesday in a report.

The I.M.F. said that some recent economic data from Britain were “encouraging,” but that the data did not point toward a sustainable recovery in the near term. “Activity appears to be improving, but a slow recovery remains likely,” the fund said.

That view stands in contrast to comments by the outgoing governor of the Bank of England, Mervyn A. King, who said last week that there was “a welcome change in the economic outlook” and that a recovery was “in sight.”

The fund has been a critic of the austerity program designed by George Osborne, the chancellor of the Exchequer, saying that the British economy would recover more quickly if the government slowed its spending cuts and tax increases. The I.M.F. reiterated that warning on Wednesday and called for additional public spending. Especially helpful to the economic recovery, the fund said, would be spending on transportation and energy infrastructure and on training for low-skilled workers.

“The U.K. is, however, still a long way from a strong and sustainable recovery,” the I.M.F. said, adding that the low level of capital investment and high youth unemployment remained a concern. “The prospect remains for weak growth,” the report said.

Mr. Osborne has rejected criticism of his austerity plan, saying that the spending cuts were essential to reduce the budget deficit, which in turn would keep Britain’s borrowing costs low and allow for economic growth to return.

A recovery might take even longer if demand from export markets like the euro zone does not pick up, banks continue to be reluctant to lend and the government’s austerity program turns out to be a bigger drag on the economy than anticipated.

Ed Balls, a spokesman on economic issues for the opposition Labour Party, said the report was “the call for action on jobs and growth that the I.M.F. has been threatening to deliver for many months and a stark warning of the consequences if the chancellor refuses to listen.”

In remarks before the I.M.F. released its report, Mr. Osborne said he broadly agreed with its contents but added, “There are no easy answers to problems built up in the U.K. over many years.” He added that it was “a hard road to recovery. But we’re making progress.”

The I.M.F. also said that the government should not shy from bolstering the capital of two bailed-out banks, Royal Bank of Scotland and Lloyds Banking Group, to ease the process of returning them to private ownership. The government took stakes in both banks during the financial crisis and owns 81 percent of R.B.S. and 39 percent of Lloyds.

In separate statements, R.B.S. and Lloyds said Wednesday that they would increase their capital reserves by retaining earnings and selling assets. Regulators said recently that all of Britain’s largest banks must raise a combined 25 billion pounds, or $38 billion, to make them more stable.

Student Loan Debt Is a Drag on the Economy, Too

Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts.

Mr. Gill owes about $45,000 in federal student loans, plus another $40,000 to his parents. That investment in his future has led to a secure job with decent pay and good benefits. But it has left him with tremendous financial constraints, as he faces chipping away at the debt for years on end.

“There’s this anxiety: what if I decided I wanted to get married or have children?” Mr. Gill said. “I don’t know how I would. And that adds to the sense of precariousness. There’s a persistent, buzzing kind of toothache around it.”

The Federal Reserve Bank of New York, in a new study, found that 30-year-olds with student loans were now less likely to have debts like home mortgages than 30-year-olds without student loans — even though most of those with student loans are better educated and can expect to earn more money over their lifetimes. The same pattern holds true for 25-year-olds and car loans.

“It is a new thing, a big social experiment that we’ve accidentally decided to engage in,” said Kevin Carey, the director of the Education Policy Program at the New America Foundation, a research group based in Washington. “Let’s send a whole class of people out into their professional lives with a negative net worth. Not starting at zero, but starting at a minus that is often measured in the tens of thousands of dollars. Those minus signs have psychological impact, I suspect. They might have a dollars-and-cents impact in what you can afford, too.”

The weak economy and tight credit standards remain the main culprits preventing young people just establishing themselves from making major purchases. But millions now face putting a substantial share of their take-home pay toward past debts rather than present needs. Student loan debt leaves them with less money for things like clothes and restaurant meals. And it is even more likely to suppress purchases of more expensive items that need to be bought with credit. A poor job market is compounding the problem: the educational debt burden of many so-called millennials has sharply increased even as they are being forced to get by on significantly less income than the previous generation — a decline of about 15 percent in real terms since 2000, with much of that drop coming from the recession.

According to calculations by the Pew Research Center, the measure of debt to income for households under the age of 35 has ballooned to about 1.5-to-1 in 2010 from about 1-to-1 in 2001. The composition of that debt has shifted, too: more is tied to student debts, and less to homes. “Having a lot of student loan debt makes it harder to qualify for a mortgage and harder to save for a down payment,” said Jed Kolko, the chief economist at Trulia.

With the interest rate on some federal student loans set to double on July 1, House Republicans and Senate Democrats have both put forward proposals to try to hold them down. Representative John Kline, Republican of Minnesota, has proposed tying the rate on several federal student loans to the government’s borrowing costs. Democratic senators, including Dick Durbin of Illinois, have made a similar proposal. Some have suggested going further: Senator Elizabeth Warren, Democrat of Massachusetts, has proposed letting students borrow at the same “discount rate” that the Federal Reserve charges to banks, currently 0.75 percent.

Student loan debt is not only constraining young adults, but also, at least in the near term, holding back the recovery itself, some economists say. The shadows might remain even as the economy picks up, by making young workers more cautious when it comes to decisions about their careers and their finances. Millennials might end up buying less expensive homes or more often choosing to rent than previous generations.

“The debt is shifting how much young people can spend, and it can also be a powerful psychological thing as well,” said Selma Hepp, an economist at the California Association of Realtors.

On the other side of the equation, many college graduates now in their 20s and early 30s should eventually be able to make up for lost ground. Students who take on debt to pay for higher education commit themselves to paying off huge sums, but they usually lift their lifetime earnings by substantial amounts. And they are in a better position to insulate themselves against economic bad times, given the profound rewards the job market provides to the college-educated.

Indeed, the economy is far more punishing to workers without a college degree. The college-educated earn, on average, 80 percent more than those who only completed high school, a premium that has widened over the last 30 years. Unemployment rates for the less educated are higher, too.

For most young workers, gaining a college degree remains well worth it in the long run, even if it delays some purchases in the near term. “For an individual going to college and ending up with a lot of debt — you’re still better off,” said Chris G. Christopher of the forecasting firm IHS Global Insight. There might, however, be a slice of young workers who paid huge sums for degrees that prove less valuable on the job market, saddled by a debt burden that could end up holding them back for decades.

Mr. Gill said his education remained a vital investment, even if the debt overhang has for now put white picket fences or a condo with a gleaming view out of reach. “Sometimes I think: ‘What if I were to buy an apartment?’ ” he said. “It is like asking: ‘What am I going to do when I first land on the moon? What’s the first thought that I will have when I see Earth from outer space?’ ”

After a Strong Recovery, China’s Economy Unexpectedly Stumbles Again

HONG KONG — Brightly hued men’s underwear in a rainbow of colors is no longer selling well in Europe for the Zhongtian Garments Company in Xiamen, China. Exports are down 30 percent in the last year.

Children’s guitars with bodies resembling cats and cartoon characters are losing their charm for Yuesen Musical Instrument Factory in Huainan, China. And at the Yuzhongniao Outdoor Products Company in Jinjiang, domestic sales and exports alike are declining this year. The Canton Fair, China’s biggest export event, ended on Sunday with few new orders. “We are not even getting many people browsing this time,” said Alice Hong, Yuzhongniao’s sales manager.

After a powerful recovery through the autumn and winter from a V-shaped downturn last summer, China’s economy is unexpectedly faltering once again. Exports are weak. The country’s domestic economy is still growing mostly because of huge increases in lending by state-controlled banks and a surge in off-balance sheet lending. Consumer spending is rising, but not fast enough to offset weakness in other sectors.

That combination has prompted growing concerns among economists and business executives about the sustainability of even 7.5 percent growth in China in the coming years, the government’s current goal after three decades of double-digit growth with only a few interruptions.

The latest sign of trouble came on Wednesday, when China’s General Administration of Customs announced export and import figures for April. On the surface, they looked fairly respectable: exports were up 14.7 percent from a year earlier, and imports were up 16.8 percent.

But April 2012 was an exceptionally bad month for Chinese exports and imports — indeed, dismal trade statistics for that month were the first sign that economic weakness during the preceding winter was turning into a precipitous decline.

This April’s trade figures appeared even weaker when economists looked closer and found that the export growth had been largely propelled by growth in exports to Hong Kong, up 57 percent, and to special customs zones in China for export later, up even faster.

Since Hong Kong’s own data has not been showing large increases in imports from China so far this year, the Chinese government has already opened an investigation into whether exporters are overinvoicing for shipments. Overstating exports can allow companies to evade currency controls and move money into China to profit from the gradual appreciation of the renminbi against the dollar.

Louis Kuijs, an economist in the Hong Kong office of the Royal Bank of Scotland, estimated that with the exclusion of overinvoicing, export growth came to only 5.7 percent.

Over the last few years, economists have tended to pay less attention to China’s exports because they were declining as a share of the country’s total economic output, because of weak overseas demand. But newer research suggests that China may still be dependent on exports.

The reason is that multinationals have been rapidly localizing their purchases of various items like computer chips and auto parts in China instead of importing them from other Asian neighbors. So while total exports may not have been rising quickly in recent years in China, the Chinese content in each dollar of exports has been increasing.

Mr. Kuijs estimated that 20.7 percent of China’s economic output came from exports last year, a figure that had bottomed out in 2009 at 19.7 percent.

In a bad sign for exports in the months ahead, the Canton Fair announced this week that export orders placed at this year’s spring session had fallen 1.4 percent from a year ago. It was the latest sign that steeply rising blue-collar wages in China and a gradually appreciating currency are starting to erode the country’s international competitiveness; foreign investment in China has also begun to level off, while surging in lower-wage countries in the region, like Cambodia and Vietnam.

Li Yong, the general manager at Yuesen Musical, said that many Japanese, Taiwanese and Korean companies in his industry had recently moved to Indonesia as costs climbed in China.

Hilda Wang contributed reporting.

Europe Looks to Merkel of Germany to Revive Economy

BERLIN — Even as the United States economy displays unanticipated resilience, with a healthy jobs report released on Friday, the outlook for Europe’s economy grows ever dimmer. As it does, the pressure builds on Europe’s most powerful leader, Chancellor Angela Merkel of Germany, and her economic team to find a way to get the Continent growing again.

But this puts Ms. Merkel in a bind, as she has to answer to German voters in September when the country holds parliamentary elections. While the European economy may be deteriorating at an alarming rate, the electorate here is still enamored of her as the Iron Chancellor, advocating the austerity policies that are rapidly falling into disfavor elsewhere, among economists as well as the public.

Her response, in recent months, has been to try a delicate balancing act, quietly easing up on crisis-stricken states, giving them more time to narrow their budget deficits, while showing no outward signs of weakness that her political rivals can pounce upon.

But this stance may become increasingly untenable, if the United States’s more stimulative economic policies begin to bear fruit and Europe continues to struggle, as seems to be the case. The European Commission said Friday that the economy of its member nations would shrink by 0.1 percent this year, while the countries that use the euro would contract even more sharply, by 0.4 percent.

And there are signs that the contagion from the south is migrating north and beginning to drag down Germany’s export-driven economy, which is expected to grow by a meager 0.4 percent this year, adding another potential source of voter discontent to Ms. Merkel’s concerns.

So the question now is not just whether Ms. Merkel will further relax her insistence on strict austerity but how far she thinks she can go in an election year, or perhaps how far she needs to go to prop up her own economy. Few experts expect any drastic departures.

“In the end, she’s this sort of Prussian-Protestant determined person,” said Stefan Kornelius, an editor at the Süddeutsche Zeitung and the author of a new book about Ms. Merkel. “She’s not ideological, but she’s truly convinced about the rightfulness of her course.”

But the constant questions about austerity are taking their toll on Ms. Merkel, who has begun to bridle in public when people ask about spending cuts.

“I think budget consolidation is now interestingly labeled with the word austerity, which is otherwise not used in Germany,” Ms. Merkel said this week at a news conference with the new Italian prime minister, Enrico Letta. “In Germany we didn’t even know this word before the crisis.”

Aware of the shifting dynamics in Europe, Ms. Merkel has chosen instead to emphasize the need for structural reforms to the labor markets of struggling countries over slashed spending. And she is not insisting on strict adherence to budget-cutting goals. That may help in the long run but can do little to immediately pull economies out of free fall.

“Her overarching goal right now is to get re-elected, and she won’t get re-elected if she spends German money on French and Italian problems without getting anything in return,” Mr. Kornelius said.

Ms. Merkel is forced to navigate dissension within her own conservative ranks at the slightest wavering from the disciplined German line, and a new party on the right, the Alternative for Germany, pressing for the more extreme step of a breakup of the euro.

To critics, Europe is facing an undeniable economic crisis and Germany is making decisions based on politics. “They are prevaricating all the time and allowing short-term domestic considerations to determine euro-zone policy,” said Charles Grant, director of the Center for European Reform, London.

Critics contend that fiscally solid countries like Germany have already gotten plenty in return and that the narrative of parsimonious Northern Europeans bled dry by profligate southerners is a false one. They have pointed to studies quantifying how Germany has been able to save billions of dollars because lower interest rates for perceived safe havens have made borrowing money dramatically cheaper.

Chris Cottrell contributed reporting.

Off the Charts: Traffic Backups as a Gauge of an Improving U.S. Economy

And while that is not good news for those facing delays, it is for the economy.

“Traffic is a great indicator of confidence on the ground,” said Bryan Mistele, the chief executive of Inrix, which compiles what it calls the Inrix Gridlock Index. “People hit the road as they return to work, and businesses ship more freight as their orders increase.” The rise in the index, he said on Friday, “shows the pulse of the economy is starting to beat faster.”

Drivers in most European countries, however, do not face the same traffic problem. With some of those economies in recession, travel times are declining.

Inrix, based in Kirkland, Wash., says it has data since 2010 on how long it takes vehicles to travel on roads in 100 metropolitan areas in the United States, as well as abroad. The data is collected from companies that monitor their fleet vehicles through GPS systems, and from cellphones and GPS devices in cars that use some mobile navigation programs.

It says it then calculates the figures for 15-minute intervals throughout the week, and is able to separate out vehicles that stop for other reasons — like a taxi picking up or discharging a passenger.

It then determines how long trips take versus how long they would take if there were no traffic to contend with, and calculates the average increase in trip length for each area, expressed as a percentage of the minimum time.

The accompanying charts show how much those delays increased, or decreased, in each month compared with the same month a year earlier. A figure above zero indicates that traffic delays are getting worse; one below zero indicates that traffic is speeding up.

For the United States as a whole, said Jim Bak, an Inrix official, “the data shows a double-dip,” plateauing in 2011 and then falling again last autumn. “We saw things improve again after the election,” he said. By improving, he means that delays are increasing.

For the United States as a whole, December was the first month since the data became available to show that delays were getting longer on a year-over-year basis. That continued in January and grew in February.

There are, of course, other reasons than the health of the economy for traffic moving faster or slower. Weather is an obvious one, but by reporting the data as monthly averages that are compared with the same month of the previous year, that is at least partly adjusted for.

In Europe, delays have recently been declining at only a slow rate in France and Britain, perhaps indicating that economic downturns in those countries are stabilizing. But the delays are all but vanishing in Italy and Spain, and have also been falling in Germany.

Honolulu, which has some of the worst traffic delays in the United States, has seen them getting worse in recent months, as have Los Angeles, New York and San Francisco. But delays seem to be getting shorter in both Seattle and Washington.

Floyd Norris comments on finance and the economy on nytimes.com/economix.

This article has been revised to reflect the following correction:

Correction: March 29, 2013

An earlier version of this column misspelled the surname of an Inrix official. He is Jim Bak, not Bax.

Fed Officials Debate Bank’s Losses Once Economy Mends

When the economy grows stronger, the Fed plans to sell some of its vast holdings of Treasury and mortgage-backed securities. The Fed also plans to pay banks to leave some money on deposit with it to limit the pace of new lending.

And that could prove an awkward combination. The Fed faces the possibility of large losses as it sells off securities, which could force the central bank to suspend annual payments to the Treasury Department for the first time since the 1930s, even as it would be increasing the amounts paid to the banking industry for its cash holdings at the Fed to control inflation.

“That sounds like a recipe for political problems,” said James Bullard, president of the Federal Reserve Bank of St. Louis. He described the predicament as one reason the Fed might consider limiting its plans for additional asset purchases.

But Eric S. Rosengren, president of the Federal Reserve Bank of Boston, said that concerns about potential losses needed to be weighed against the benefits of asset purchases. The Fed holds almost $3 trillion in Treasuries and mortgage bonds, and it is adding about $85 billion a month in an effort to cut unemployment.

Mr. Rosengren, a leading advocate of the purchases, said Boston Fed research showed asset purchases this year could help create about 400,000 new jobs.

“That’s what the Federal Reserve should really be caring about, what’s happening with the dual mandate with and without” the asset purchases, Mr. Rosengren said. “When I think about the costs, I have to weigh that against the benefits,” he said at the US Monetary Policy Forum in New York on Friday.

By law, the Fed sends most of its profits to the Treasury, and in recent years those profits have soared as the Fed has collected interest on its investments. Last year, the central bank contributed $89 billion to the public coffers — essentially refunding a significant portion of the federal government’s annual borrowing costs.

The purpose of the investment portfolio is to hold down borrowing costs for businesses and consumers. As the economy revives, the Fed has said it will begin selling some of those holdings. But it faces potential losses on those sales because interest rates would be rising. Security prices, which move inversely to rates, would be falling, and the government would be issuing new debt at the higher rates, making the low-yield bonds that the Fed holds less valuable.

Estimating the potential losses requires a wide range of assumptions on Fed policy, economic growth and interest rates. A Fed analysis published last month, which assumed that interest rates rose to 3.8 percent later this decade, estimated that the central bank might record losses of $40 billion and suspend contributions to the Treasury for four years beginning in 2017. If rates rose by another percentage point, however, the analysis estimated that losses would triple. An independent analysis published on Friday foresaw losses of around $20 billion and a suspension of payments for only three years.

The Fed can afford to lose money because it can simply print more. It would record a liability, and pay down the debt as profits rebounded.

But there are signs that the Fed’s political opponents would seize on any losses as evidence of economic malpractice. And such that criticism could come at a vulnerable moment: central banks are never popular when they are raising interest rates.

Representative Jim Jordan, an Ohio Republican, cited the potential losses in an open letter this week to the Fed chief, Ben S. Bernanke, requesting more information on what he called “the potentially devastating consequences from any unwind.”

Jerome H. Powell, a Fed governor, insisted Friday that the central bank would not allow its course to be influenced by such political pressure.

“We’re independent for a reason,” he said. “Congress has given us a job to do.”

Some supporters of current Fed policy also argue that an economic revival would inoculate the central bank against criticism, in part because the government’s coffers would be filling even without the Fed’s contributions.

But Frederic S. Mishkin, a Columbia economist and one of the authors of the independent analysis of the Fed’s potential losses, said that was wishful thinking.

“Politicians have very short memories,” said Professor Mishkin, a former Fed governor. “They’re going to focus very much on the fact that the Fed is no longer pulling its weight in terms of producing remittances for the federal government.”

It's the Economy: What Will the Economy’s New ‘Normal’ Look Like in 2013?

Despite a worse-than-expected holiday season, the Federal Reserve forecast that G.D.P. growth would approach the historic average of about 3 percent in 2013. The economy may be coming back, but the question for many businesses is what the new “normal” looks like. Will shoppers spend as they did in the credit-bubble years? Or has the Great Recession scared them into prolonged stinginess? Early evidence suggests a mix. What is clear is that the big changes are just beginning.

Waste More, Want More

From the 1970s through the 1990s, the dominant retail trend was toward cheap and big: shoppers drove long distances to buy large boxes of everything they needed in bulk. Starting in the last decade, though, this began to change. And the success of products like Tide Pods (premeasured balls of detergent that made Procter & Gamble an estimated $500 million last year) suggest that the era of premium conveniences isn’t going anywhere.

Somewhat counterintuitively, this trend is directly related to the downturn, says John N. Frank, an analyst at Mintel, a market-research firm. Fearful of losing their jobs, millions of workers coped with the crisis by putting in more time at the office — “doing at least two people’s jobs,” Frank says — even if it meant less time to shop for deals. Dollar General saw tremendous growth as a more convenient alternative to Sam’s Club. Duane Reade, now owned by Walgreen, is proving that no block in Manhattan should be without a drugstore that also carries basic grocery items at an upcharge. Frank says he expects that anxious, overtired workers will drive this trend well into this decade, too.

Housing Is Back

Now that at least one million households are looking to move somewhere better, investors are looking to buy houses on the cheap — not to flip, but to rent. (The Blackstone Group, the private-equity colossus, has spent more than $1 billion this year buying up thousands of single-family homes around the country.) New residential construction starts also came back strong last year, and much of the growth was from multiunit apartment buildings designed, yes, for renting.

Despite the fact that homeownership has been promoted as a universal economic good since the Depression, the trend toward rentals might be a good one. Renters are more able to follow the job market. Renting, as the housing bubble revealed, benefits the overall recovery, because fewer people have their money tied up in one asset.

Not Your Father’s Oldsmobile

In 2012, the average life of a car in the United States reached a historic high of 11.2 years. This was tied to the collapse of new-car sales during the recession, but it was also driven by several long-term shifts. After steady increases for decades, Americans are driving less. Total miles driven in the United States hit 3 trillion for the first time in 2006. It went up even further in 2007 but has generally fallen since.

For the first time in nine decades, according to census data, walkable cities are growing faster than suburbs. And wherever people happen to move, they are buying smaller, more fuel-efficient cars. Large- and some luxury-car segments are falling, says Tom Libby, an automotive research analyst at Polk, and the cheaper subcompact and emerging sub-subcompact classes are growing. All this means that autos — one of the biggest industries in the United States — will not soon regain the explosive growth of the early 2000s.

Debt and Taxes

In 2008, Americans owed a collective $12.7 trillion. Today, thanks in part to mortgage defaults, we are down to $11.3 trillion, which is about 95 percent of our disposable income. That’s progress, but it’s still higher than the 88 percent we owed 10 years ago.

Additional reporting by Jacob Goldstein

Adam Davidson is co-founder of NPR’s “Planet Money,” a podcast and blog.

Japan Leader Keeps Up Pressure on Central Bank to Stimulate Economy

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U.N. Presents Grim Prognosis on the World Economy

The main author of the report, Robert Vos, director of the Development Policy and Analysis Division of the United Nations Department of Economic and Social Affairs, said it could take until at least 2017 just to recoup the jobs lost in the United States and Europe since the 2008-9 global recession.

He forecast world growth for 2013 at 2.4 percent, “a significant downgrade” from the United Nations midyear forecast of 3.1 percent. He said the 2012 growth rate was 2.2 percent, vs. the midyear forecast of 2.5 percent.

“I’m afraid this time around we’re not very optimistic about how things are moving,” Mr. Vos said at a news conference at United Nations headquarters.

“A worsening of the euro area crisis, the ‘fiscal cliff’ in the United States and a hard landing in China could cause a new global recession,” Mr. Vos said in the report, “World Economic Situation and Prospects 2013.” He said the forecast growth was “far from sufficient to overcome the continued jobs crisis that many countries are still facing.”

The report’s proposals to avoid that outcome — more government programs that focus on job growth, fiscal coordination and aid to developing countries — are not likely to be widely embraced by policy makers in the United States and Europe, where the preoccupation is on budget cuts and spending discipline. Still, the report provides one of the most complete assessments of the world’s economic trends and reflects what United Nations experts view as the most pressing areas of concern.

Shamshad Akhtar, assistant secretary general for economic development, who introduced Mr. Vos’s report, began by reciting a litany of maladies, including record unemployment in Europe, a decline in global trade, volatility in the flows of capital and low food stocks in many poorer countries that have made prices in those countries unpredictable.

While she and Mr. Vos acknowledged the news reports on progress in the debt-reduction negotiations between the White House and Congressional Republicans to avoid dire automatic year-end spending cuts, what has been called the fiscal cliff, they erred on the side of assuming the worst. Both said the shock of such spending cuts would further weaken economies elsewhere.

“Even if we don’t get to the fiscal cliff, what’s on the table now is not too far from what would happen if the United States goes over the cliff,” Mr. Vos said. “That is reason for some concern.”

He criticized the focus in developed countries on austerity, calling it “detrimental to their own economic recovery,” and said cuts “should not come at the expense of the development efforts of the poorest nations.”

Unlike the economic crisis four years ago, when China helped to cushion the impact with enormous doses of stimulus spending, there is no single savior this time. If China’s growth rate of 7.5 percent this year slows to 5 percent or less, Mr. Vos said, “that would have major global ramifications.”

He said growth rates in 2012 fell sharply almost everywhere except Africa, where economies grew in the 5 percent to 6 percent range, helped by strength in oil-exporting countries, spending on basic infrastructure improvements and expanding ties with Asian economies.

Nonetheless, he said, Africa remains plagued by armed conflicts and other “numerous challenges,” and the strong growth rates will not hasten the end of the continent’s poverty.

It’s the Economy: What the Penguin-Random Merger Says About the Future of the Book Business

When you see a merger between two giants in a declining industry, it can look like the financial version of a couple having a baby to save a marriage. At least that was my thought when Random House and Penguin, two of the world’s six largest publishers, announced that they were coming together last month. Ever since Amazon began ripping apart the book business, the largest houses have been looking for a way to fight back. If this merger is any indication, they have chosen an old-fashioned strategy: Size.

Deep thoughts this week:

1. Book publishing is turning to mergers out of desperation.

2. Will it work?

3. The answer may lie in the envelope industry, which survived by disappearing.

Adam Davidson translates often confusing and sometimes terrifying economic and financial news.

A combined Penguin-Random House, which would control a quarter of the global book market, is a conglomerate designed to take on another giant, though it’s not exactly a fair fight. Because the new entity will only have about a twelfth of Amazon’s annual sales, most observers expect that this is just the beginning of a series of mergers — like those in the music business — that will take the Big Six publishers down to the Big Three and perhaps one day even the Big One. As John Makinson, Penguin’s chief executive, told The Times, “We decided it was better to get in early rather than be a follower.” The question is whether this strategy will work.

There are two competing predictions about commerce in the digital age. One is that companies will get smaller and more disruptive as nimble entrepreneurs can take on giant corporations with little more than 3-D printers and Web sites. The other envisions a few massive companies — like Procter & Gamble, Apple and Nike — that design everything themselves, have it manufactured cheaply in Asia and use their e-commerce sites to gather information about their customers. Nearly the exact same conflict occurred more than a century ago in the decade that straddled 1900, which was also a period of rapid technological change. In just a few years, 1,800 small companies were swallowed up as the electrical-power, telephone, auto, steel and chemical industries grew from patchworks of tiny companies into conglomerates. In “The Great Merger Movement in American Business 1895-1904,” the Yale economist and historian Naomi Lamoreaux wrote that back then everyone worried about the same thing that authors, editors and book buyers worry about now: Are large companies good for the economy? Do they grow through efficiency and innovation or by abusing their leverage?

Lamoreaux found that they did both, and many turn-of-the-century examples suggest what might happen to Penguin-Random and others. On one end of the spectrum, Lamoreaux told me, was U.S. Steel. Its predecessor companies competed by finding new ways of making steel at ever-lower prices. But after J. P. Morgan merged three companies into one behemoth, he discovered a better way to profit. Because all steel producers bought iron ore from the Mesabi Range in Minnesota, U.S. Steel bought most of the range and locked much of the rest of it in long-term contracts. As a result, the company hardly worried about competition; it had little need to innovate or compete on price, which made everything from cars to soda cans more expensive. Worse, it left a massive industry unprepared for the growth of innovative Asian companies during the 1970s and 1980s. By then, U.S. Steel all but collapsed, and a chunk of the U.S. economy went down with it.

Sears & Roebuck, on the other end, “grew by solving market and technical problems,” Lamoreaux said, and, as it solved them, its market share increased. Unable to monopolize anything like iron ore, Sears needed to innovate to stay ahead. Through constant competition with Montgomery Ward and others, it adopted new strategies that ultimately benefited its customers. When the company got into trouble, closed stores and was bought in 2005 by a struggling competitor, Kmart, the retail industry was robust enough that the overall economy barely noticed.

The future of book publishing is somewhere between the two poles. Oddly enough, it seems to mirror what happened to the envelope business. In the early 1900s the envelope industry was large enough to support several big companies. Then the mergers started, and an industry of numerous small companies became two giants. Eventually, the envelope industry wasn’t large enough to sustain itself, and the companies became tiny divisions of larger conglomerates. U.S. Envelope still lives as a small part of the packaging manufacturer MeadWestvaco. American Envelope was bought by Cenveo, a business-stationery company whose chief executive, Robert G. Burton Sr., made clear that the century of mergers and buyouts is not over. “We’ve had people knocking on the door,” he told shareholders in August.

Adam Davidson is co-founder of NPR’s “Planet Money,” a podcast and blog.