Plus: Trade and Production in the U.S., Positive Signs in the UK and MORE.

Last week President Barack Obama discussed breakthroughs on two polarizing issues: energy and health care, which would provide key pillars for a new foundation for the country.

Compromises Made on Energy Bill
The United States House Energy and Commerce Committee last week struck a compromise on clean energy legislation.

President Obama last week praised the committee’s “extraordinary progress” toward approval of “far-reaching legislation on energy and global warming by the end of next week,” the New York Times reports. Obama said that while the bill is “weaker in a number of areas than the original version introduced six weeks ago,” it “represented a major step toward his goals of addressing climate change and reducing the nation’s reliance on dirty fuels.”

However, the president then “quickly pivoted to his more immediate legislative priority, changes in health care costs and coverage, which he insisted have to be made this year. He has set no deadline for energy legislation.”

Democrats on the House Energy and Commerce Committee have agreed on a plan to cut U.S. greenhouse-gas emissions 17 percent by 2020. Bloomberg News points out that “the 17 percent reduction goal is less ambitious than the 27-nation European Union’s target for its own polluters, setting the stage for a possible clash at next month’s international negotiations to forge a new climate-change treaty.”

The target may not be large enough to provoke concessions from the most-polluting developing nations, China and India, which have refused to take on emissions-cutting goals, Abyd Karmali, Merrill Lynch & Co.’s London-based global head of carbon markets, told Bloomberg News.

Landmark Meeting Readdressing Health Care
Addressing the second “key pillar,” the president last week hosted “a landmark meeting” that “marked one of the most promising signs for health reform to date, and not only because the topic was saving more than $2 trillion on health care costs,” according to the White House Web site.

On Monday, representatives of pharmaceutical companies, medical device manufacturers, hospitals, insurance companies and labor unions pledged to slow the rate of growth of health-care spending. “These are some of the groups who have been among the fiercest critics of past comprehensive health-care reform plans,” Obama said in his weekly radio and Internet address. “Today they too are recognizing that we must act.”

“In short,” according to the White House, “the coalition has agreed to reduce the annual health care spending growth rate by 1.5 percentage points for the next 10 years, a change that could result in savings of roughly $2,500 for American families.”

Some of the changes the coalition is working on, explained fully in the fact sheet, include:

• Improving care after hospitalizations and reducing hospital re-admission rates;
• Reducing Medicare overpayments to private insurers through competitive payments;
• Reducing drug prices;
• Improving Medicare and Medicaid payment accuracy; and
• Expanding the Hospital Quality Improvement Program.

“Obama brought the group together as part of his campaign to build political momentum for his proposals to revamp the U.S. health-care system,” Bloomberg News notes. “Lawmakers in the House and Senate are sorting through options for extending insurance to some of the 46 million Americans without health coverage and holding down the growing costs. The administration and Congress must decide on how to pay for health-care changes through a combination of spending cuts and tax increases.”

U.S. Trade Deficit Widens in March
The U.S. Department of Commerce last week announced that the nation’s trade deficit grew to $27.6 billion in March, from $26.1 billion in February. According to the New York Times, the increase was smaller than economists had been expecting and that “economists said the sharp declines in the value of trade between the U.S. and the rest of the world appeared to be hitting a plateau.”

The Commerce Department reports:

In March, the goods deficit increased $1.2 billion from February to $38.4 billion, and the services surplus decreased $0.2 billion to $10.8 billion. Exports of goods decreased $2.5 billion to $82.0 billion, and imports of goods decreased $1.3 billion to $120.3 billion. Exports of services decreased $0.5 billion to $41.7 billion, and imports of services decreased $0.3 billion to $30.9 billion.

In March, the goods and services deficit decreased $29.8 billion from the same month last year. Exports were down $26 billion, or 17.4 percent, and imports were down $55.9 billion, or 27 percent from March 2008.

“Economists said the latest data indicate the domestic and global economies are stabilizing, although at very low levels,” the Associated Press says. “But critics pushing for a tougher stance on trade said the rise in the overall deficit underscored the need for the Obama administration to take a tougher approach.”

Economists expect the deficit will remain at low levels this year as the recession in the U.S. hurts demand for foreign goods.

“Today’s numbers are better than many economists predicted, and it’s worth noting that the trade deficit is half of what it was in the first quarter of 2008. Still, they indicate just how difficult the global economic environment is,” Commerce Secretary Gary Locke said in a statement on Tuesday.

Economists in the latest Wall Street Journal survey see an end to the recession by autumn, but say it will take years for the economy to recover fully. “On average, the 52 economists who participated in the survey project [predict] that the recession will end in August,” the Wall Street Journal reports (subscription required). “They expect gross domestic product (GDP) to contract 1.4 percent at a seasonally adjusted annualized pace in the current quarter, compared with the 6.1 percent drop recorded in the first quarter. Nearly half of the economists said it will take three to four years to close the output gap, while more than a quarter say it will take five to six years.”

U.S. Industrial Production Falls in April
“The nation’s industrial production fell in April by the smallest amount in six months, fresh evidence that the pace of the economy’s decline is slowing,” the Associated Press reports. “Analysts expected a drop of 0.6 percent in April.”

After having fallen 1.7 percent in March, industrial production decreased 0.5 percent last month, according to the U.S. Federal Reserve‘s latest findings.

Production in manufacturing declined 0.3 percent in April following the 2.1 percent fall in March. The factory operating rate edged down 0.1 percentage point to 65.7 percent in April. The production index for durable goods decreased 0.3 percent, with declines in most categories. The production of non-durable goods edged down 0.1 percent.

Bloomberg News says that the figures “signal that manufacturing is bottoming out after companies slashed their stockpiles of unsold goods the most on record in the first three months of the year.”

“We believe the April industrial production report should be viewed with some optimism that the severe industrial recession is starting to bottom out,” Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI, commented. “Taken in the context of some improvement in housing and motor vehicles activity, the relatively small decline in industrial production is a sign that is consistent with our forecast that the recession will end this fall.”

Still, the Fed report shows that U.S. industry remains weak. “Industrial production has fallen in 15 of the 17 months since the recession began in December 2007, and is down 16 percent since then,” the Associated Press notes.

UK Economic Data Show Signs Recession May be Easing
Manufacturing output was higher than expected in March, posting its slowest decline for more than a year.

“The (UK) economy’s output stopped falling last month, according to a highly respected economics research institute, as the manufacturing industry recorded its smallest decline in more than a year,” the Financial Times reports (subscription required).

In its monthly estimate of growth, the National Institute of Economic and Social Research (NIESR) has suggested that GDP was “flat” in April. “Our monthly estimates of GDP suggest that output fell by 1.5 percent in the three months ending in April, after the decline of 1.9 percent in the first calendar quarter of this year,” the report states. “The estimates for April themselves point to output stopping falling.”

The news, “following several months of improving data, suggests that the UK economy is past the worst of the recession, although the NIESR warns against making too much of the figures, which can be erratic,” the Financial Times notes.

Meanwhile, on Tuesday, “the number of people claiming jobless benefits rose a less-than-expected 57,100 in April, from March’s downwardly revised 65,500 increase,” the Wall Street Journal reports (subscription required). “That pushed the overall count to 1.51 million, the highest since August 1997.”

Moreover, according to the latest figures from the Incomes Data Services pay databank, “a substantial proportion of employers are continuing to pay increases of 3 percent or 4 percent in spite of the growing number of wage freezes,” the Financial Times reports (subscription required). “…[W]hile pay freezes accounted for a fifth of all pay reviews in the latest three-month period, more than a third of awards so far this year had been for between 3 percent and 4 percent.”