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January 18, 2014

Fiscal fatigue grabs capital as Obama preps speech

WASHINGTON — After last fall’s tumultuous, bitterly partisan debt ceiling and government shutdown fights, a sense of fiscal fatigue seems to be setting in among many Washington policymakers as President Barack Obama prepares for his fifth State of the Union address later this month.

A declining U.S. budget deficit, still-accommodative Federal Reserve and a small-bore budget deal negotiated last month — given final approval Thursday in Congress and signed by Obama on Friday — are helping to temper partisan rhetoric in the short term as attention in Washington shifts to the approaching midterm elections.

The recovery from the deep recession of 2007-2009 has been one of the slowest in history and still has a ways to go, especially in terms of regaining lost jobs. That was driven home by a Labor Department report last Friday that U.S. employers added just 74,000 jobs last month, far fewer than had been forecast and the smallest monthly gain in three years.

The overall jobless rate dropped to 6.7 percent from 7 percent in November, the lowest level since October 2008. Much of the decline came from Americans who stopped looking for jobs and are no longer being counted by the government as unemployed. Meanwhile, a growing number of baby boomers are retiring.

Still, economists are generally predicting a pickup in economic growth in 2014 amid a continued favorable climate of low inflation, falling oil prices, a housing recovery and the Fed sticking to its plan to only slowly pare back the hundreds of billions of dollars in financial stimulus it has pumped into the economy over the past four years.

Meanwhile, recent polls show rising public distaste for brinkmanship and dysfunction on both sides of the political divide in Washington. In a recent poll, conducted by the AP-NORC Center for Public Affairs Research, 70 percent said they lacked confidence in the government’s ability “to make progress on the important problems and issues facing the country in 2014.”

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