@ The White House
In the morning, the President and the Vice President will receive the Presidential Daily Briefing in the Oval Office.
Afterwards, the President will meet with senior advisors in the Oval Office.
Later in the morning, the President and the Vice President will deliver remarks to the National Governors Association in the State Dining Room. The First Lady and Dr. Biden will also deliver remarks.
In the afternoon, the President and the Vice President will meet with Secretary Geithner in the Oval Office.
Later in the afternoon, the President will attend a campaign event in Washington, DC.
@ Wall Street
Oil prices are on the rise again and concerns are growing about their impact on the recovery. The situation is reminiscent of early-2011, when Brent oil prices reached $126/barrel, creating a growth pocket in the middle of the year. Currently, we are projecting an average of $115/barrel for Brent crude oil this year and 2.1% real GDP growth in our baseline macroeconomic forecast. Brent prices are currently $125/barrel ? $10/barrel above our assumption for the year. If oil prices stay persistently high or continue to rise, growth forecasts will likely be revised downward. But it would take a much bigger spike in prices to sink the US economy back into recession. Results from the IHS Global Insight model of the US economy suggest that this extra $10/barrel could shave a couple of tenths of a percentage point off of our real GDP growth forecast to 1.9% from 2.1%. Job growth would still pick up compared to last year, but to a somewhat slower pace (1.4% vs. 1.5% currently projected). Inflation would jump this year, but fade in 2013. And even these results, based on $125/barrel Brent, are conditional on oil prices staying permanently higher and not falling back. The near-term path for oil prices is foggy at this time. Tensions with Iran could recede and renewed concerns over Europe would hurt confidence and boost the dollar, sending oil prices lower. If so, the impact on the broader economy could be even less severe.
The data calendar was light this week (February 20-24) but offered further reasons for optimism about the economic recovery. Existing home sales were up in January while new home sales held steady. But the real positive news was the declines in months? supply of homes for sale, which should help to stabilize home prices. An early-February dent in the Reuters/University of Michigan Consumer Sentiment Index disappeared in a late-month update, suggesting that so far, households are taking higher gas prices in stride. Finally, initial unemployment claims were unchanged, defying expectations of a small increase. This is a good sign for the labor market, though unseasonably warm weather could be helping certain sectors.
The data centerpiece this week (February 27- March 2) will be the ?second? reading on Q4 Real GDP, where growth is expected to be revised down slightly. However, the configuration of growth should actually improve, with more attributable to business capital investment and less to inventory accumulation. The January Personal Income and Spending report should show a boost to incomes ? thanks to a military pay raise and Social Security cost of living increase ? as well as higher spending ? thanks to mild weather and improved jobs prospects and confidence. The ISM Manufacturing Index is expected to post a small gain, pointing to a mild acceleration in the pace of the manufacturing recovery in February. Home prices are seen falling again in the S&P/Case-Shiller Index for December, widening year-on-year declines. Motor vehicle sales were likely strong in February ? though not as strong as January ? thanks to mild weather and despite higher gas prices.
