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As the unemployment rate climbs toward 10 percent, President Barack Obama is facing a rising clamor from within his Democratic party to take new steps to lift the economy and jump-start job growth.

But soaring budget deficits are likely to constrain Obama’s options as he considers ideas ranging from bolstering safety-net programs and extending a popular tax credit for first-time home buyers to new initiatives such as tax incentives to encourage business hiring.

“The administration and the country are in a very difficult situation,” said William Galston, a scholar at the Brookings Institution and former policy adviser to President Bill Clinton.

“All of the projections known to me suggest we are in for a very extended period of higher-than-average unemployment, a more extended period than we’ve endured for a very long time.”

On the other hand, Galston said, “You run up against the stubborn fact that our budget deficit is already sky high.”

He and other analysts said the means to alleviate the economic distress are by no means clear. Ideas such as a tax credit for job hiring face questions about their effectiveness and would be costly.

Still, the bleak jobs picture could put some of Obama’s Democratic allies at risk in next year’s congressional elections, unless voters are convinced they are doing all they can to help the economy.

Obama met on Wednesday with the two top Democrats in Congress, House of Representatives Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, to discuss the economy no fax pay day loan. The meeting took place at the lawmakers’ request.

INEFFECTIVE STIMULUS PACKAGE

The White House has emphasized its discussions on how to spur job growth are still in the preliminary stages.

One dilemma for Obama is that Republicans, seizing on the rise in the unemployment rate to 9.8 percent, argue that the $787 billion stimulus package passed earlier this year was ineffective.

The White House says the stimulus plan cushioned a blow to an economy that was in dire straits and would have been in far worse shape without the package.

Still, perhaps out of wariness of giving Republicans further ammunition, the Obama administration has steered clear of using the term “stimulus” to describe the additional moves it is considering for the economy.

Some measures, such as extending safety-net programs, could be adopted quickly, while other proposals may not be put forth until Obama’s State of the Union address in January.

One step that enjoys strong support is extending jobless benefits for those who may have already exhausted them. 

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A Federal Reserve official said on Tuesday that while the U.S. economy is clearly rebounding, it is too soon to begin to withdraw the Federal Reserve’s massive support.

“I see nothing that conflicts with the widely held opinion that we are in recovery,” Kansas City Fed President Thomas Hoenig said at an economic conference.

“I would not support a tight monetary policy in the current environment,” Hoenig said in his written remarks.

However, he warned that it will be important for the Fed to pull back from its ultra-low interest rates and withdraw the vast amounts of cash it has put into the financial system before igniting inflation.

“Monetary policy has to think ahead a year, or more,” said.

Hoenig cautioned that benchmark interest rates, which are now near zero, would be accommodative even at 1 percent or 2 percent.

“My experience tells me that we will need to remove our very accommodative policy sooner rather than later.”

Besides cutting interest rates, the Fed has more than doubled the size of its balance sheet as it has sought to pull the United States out of the worst financial crisis since the Great Depression.

DUCK DOUBLE-DIP

The Fed noted in September that the economy may be picking up after a long contraction, but recent evidence of lingering weakness in the labor market raised questions about the pace of the recovery.

Hoenig said government spending and tax relief should complement Fed efforts and prevent the economy from backsliding.

“A vast amount of stimulus has been put in place to spark this recovery, and I believe it will prevent a double-dip recession.”

Hoenig also warned that rising levels of levels of U.S. indebtedness born of ballooning budget deficits and social welfare program costs are unsustainable.

High U.S. debt-to-GDP levels are “long term risk at best,” he said.

One danger would be increasing political pressure on the central bank to monetize the debt by keeping interest rates artificially low. 

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Dow Chemical Co said on Monday it would begin selling a new rooftop shingle next year that converts sunlight into electricity — and could generate $5 billion in revenue by 2015 for the company.

The new solar shingles can be integrated into rooftops with standard asphalt shingles, Dow said, and will be introduced in 2010 before a wider roll-out in 2011.

“We’re looking at this one product that could generate $5 billion in revenue by 2015 and $10 billion by 2020,” Jane Palmieri, managing director of Dow Solar Solutions, told Reuters in an interview.

The shingle will use thin-film cells of copper indium gallium diselenide (CIGS), a photovoltaic material that typically is more efficient at turning sunlight into electricity than traditional polysilicon cells.

Dow is using CIGS cells that operate at higher than 10 percent efficiency, below the efficiencies for the top polysilicon cells — but would cost 10 to 15 percent less on a per watt basis.

Dow Solar Solutions said it expects “an enthusiastic response” from roofing contractors for the new shingles, since they require no specialized skills or knowledge of solar systems to install.

The new product is the latest advance in “Building Integrated Photovoltaic” (BIPV) systems, in which power-generating systems are built directly into the traditional materials used to construct buildings.

BIPV systems are currently limited mostly to roofing tiles, which operate at lower efficiencies than solar panels and have so far been too expensive to gain wide acceptance.

Dow’s shingle will be about 30 to 40 percent cheaper than current BIPV systems.

The Dow shingles can be installed in about 10 hours, compared with 22 to 30 hours for traditional solar panels, reducing the installation costs that make up more than 50 percent of total system prices.

The product will be rolled out in North America through partnerships with home builders such as Lennar Corp and Pulte Homes Inc before marketing is expanded, Palmieri said.

Dow received $20 million in funding from the U.S. Department of Energy to help develop its BIPV products.

The company also produces fluids used in concentrated solar systems, in which sunlight is used to generate heat that produces steam to power a turbine.

In addition, it supplies materials used to help manufacture photovoltaic panels and increase their efficiency.

Dow shares were up 4.4 percent at $24.67 on the New York Stock Exchange in afternoon trading.

(Reporting by Matt Daily, editing by Dave Zimmerman and Gerald E. McCormick)

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One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, according to Morningstar Inc.

It’s part of a broader shift by many investors who have been scared away by stocks, despite the market’s hefty rebound from its March low. They’ve been piling into the greater safety of bonds, and TIPS — while not without risk — are about as safe as you can get.
The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren’t necessarily the best short-term investment. But historically low interest rates and the federal government’s growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

Here are some common questions and answers about TIPS:

How do TIPS work?

Introduced by the government in 1997, TIPS are a type of Treasury bond — investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you’re paid the adjusted principal or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn’t seem so good, until you consider what havoc inflation might wreak no teletrack payday loans. The difference — or "break-even rate" — between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries’ current 3.32 percent yield, TIPS investors will be glad they paid for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

How have TIPS’ values held up lately?

Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS in the middle of the performance pack among fixed-income fund categories.

How can I buy TIPS?

TIPS are available for purchase from the Treasury at http://www.treasurydirect.gov to avoid brokerage fees. If you’re not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities but can be traded like a stock.

TIPS appear to carry little risk. Is that the case?

Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Fed boosts interest rates faster than inflation grows, or before inflation sets in, TIPS’ values will erode.

They also can be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients’ orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they’ve bounced back.

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China’s Sichuan Tengzhong Heavy Industrial Machinery is poised to complete its purchase of General Motor Corp’s Hummer division within days, the South China Morning Post reported on Saturday.

The paper said executives were in Detroit this weekend putting the finishing touches on the deal no teletrack payday loan.

A Tengzhong spokesman was not immediately available for comment.

(Reporting by Michael Flaherty; Editing by Sanjeev Miglani)

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Federal Reserve officials said on Thursday that while the recession-battered economy is on the mend, it will be weak for a while and the Fed is likely to keep its extensive support policies in place for a while.

The presidents of the Cleveland and the Atlanta Federal Reserve banks, in separate remarks, highlighted the economy’s continued reliance on government stimulus programs in citing its fragile state.

Cleveland Fed President Sandra Pianalto said she expects a gradual and bumpy recovery from the recession and is not worried that the Fed’s extensive efforts to pump money into the economy risk igniting inflation.

“I believe there is enough slack in the economy to keep inflation subdued for some time. In this environment, I believe that maintaining the current accommodative policy stance helps to foster both the continued recovery of our weakened economy and the stabilization of inflation rates at levels consistent with price stability,” she told a conference sponsored by Market News International.

Both Pianalto and Dennis Lockhart, president of the Atlanta Federal Reserve, said they expected already-high unemployment rates to continue to climb.

The Fed at its policy-setting meeting last week moved toward phasing out some of its massive support for the economy, but pledged to keep interest rates exceptionally low for an extended period to support the fragile recovery.

In Washington, the debate continued over how to reform financial regulation in order to prevent the occurrence of another financial crisis in the future; some have faulted the Fed, saying it should have been more aggressive in spotting or preventing the deep crisis of the last year.

Fed Chairman Ben Bernanke gave his clearest endorsement yet on Thursday of giving authority to a council of regulators headed by the Treasury Department to oversee the health of the broad financial system.

SIGNS OF A REBOUND

There are early signs from credit and housing markets that the economy is rebounding from the downturn, said Pianalto, who will be a voter on the Fed’s policy-making body next year, when many economists expect the central bank to begin raising rates.

“I would not be surprised to find that when we look back a year from now, we will see that mid-summer marked the end of this recession,” she said.

The Atlanta Fed’s Lockhart said unemployment is likely to persist despite evidence the economy could grow by an annual rate of between 2.5 percent and 3 percent in the July-September period.

“To bring people back to work, it’s going to take a while,” said Lockhart in response to questions after a speech at the Georgia State College School of Business in Macon.

“Unemployment’s going to be frustratingly high for some period of time,” said Lockhart, who is currently a voter on the policy-setting Federal Open Market Committee.

Asked by reporters how fast the Fed would remove its ultra-low rates and shrink its huge balance sheet, Lockhart said, “I doubt we’re going to go for years without the need to raise rates,” but added that the U.S. economy would likely have to adapt to slower rates of growth than before the financial crisis. 

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