Think the spike in regulation is just a fluke?
Think again. Moves to increase oversight
of financial and housing markets are just the start.
The era of big government is back...big-time.
Look at the bill that Congress just passed
to beef up the Consumer Product Safety Commission.
It gives the agency power to set tough new standards
for everything from toys to fax machines to pajamas.
Next year will see a much broader reg push,
one that gives Washington a far more active role.
Many states are also pressing ahead with new rules.
The shift is a backlash to the Bush years,
when regulators were reined in by the White House.
Democrats will lead the regulatory drive.
They are almost certain to have bigger majorities
in Congress after the Nov. elections (see page 3).
But McCain as well as Obama wants it.
Both see a need to set new standards on energy,
the environment and safety...and to curb excesses.
Obama, however, sees a bigger role for government.

Limits on emissions of carbon dioxide and other gases are a safe bet.
Expect a bill imposing a cap and trade system with pollution limits that are costly
for producers and users of coal, electricity, metals, chemicals, autos and airplanes.
Additional green rules are also likely. The Environmental Protection Agency
will get more staff for both research and enforcement. Democrats say Bush’s aides
squelched or watered down many rules, and they’ll want to take a fresh look at some.
Senate Democrats will demand promises from EPA nominees before confirming them.
Other probable areas: Labor. Democrats will push laws making it easier
for unions to organize. And they’ll insist on more enforcement of wage regulations.
Food and drugs. Recent controversies over unsafe drugs and foods
will lead to a beefed-up Food and Drug Administration. Congress will pass legislation
giving the agency more power to regulate advertising, order recalls and levy fines.
Workplace safety. Some Labor Department agencies will get the go-ahead
to give greater scrutiny to standards in use in several industries, especially mining,
building, chemical plants, oil refineries, food processing, logging and freight yards.
Companies that run afoul of rules can expect fines and even criminal penalties.
Human resources. Democrats, through either legislation or regulations,
will expand the Family and Medical Leave Act to cover adoptions and other events.

And more financial industry regulations are coming. Limits on speculation
in oil markets are possible if prices spike again. Plus increased regulation of banks,
insurance companies and stock markets is likely as a reaction to the credit crunch.
With the economy expected to grow 1.5% this year and next, businesses
and consumers stung by gas prices, real estate and credit woes must wonder:
Where is the growth coming from? Weakness seems to be nearly everywhere.
Exports, federal spending and rebate check shopping are feeding GDP gains.
The weak dollar helped boost exports by a bit more than 9% in the second quarter.
Federal spending...up nearly 7%. Consumer spending...a better than expected 1.5%.
What’s not rising is business spending on new equipment...down 3.4%.
One sweet note for everyone: Inflation is in check. Although energy
and food prices have soared, underlying inflation...measured using GDP figures
and the best available gauge of price pressures in the economy...rose just 2.1%
in the last quarter. That’s close to the Federal Reserve’s long-term goal of 2%.
When the Fed meets next, on Aug. 5, it will keep interest rates steady.
Monthly job losses should taper off into the fall, maybe even reverse,
with tiny monthly gains in employment. For the year...a net loss of 500,000.
Seeds of a recovery lie in easing oil prices, a trend we expect to continue.
By year-end, look for oil prices at about $110 a barrel. Come 2009...
averaging at or near the $100 mark, though there’ll be plenty of ups and downs.
That’ll take close to 40¢ a gallon off gasoline pump prices by late Dec.,
putting the national average at about $3.50. In 2009, we see a further decline
and an average for the year of roughly $3.40, 20¢ less than the average this year.
Figure on paying about 50¢ less for a gallon of diesel by New Year’s.
The 2009 yearly average should run near $4.15 a gallon, 15¢ below this year.
It’ll take longer for users of heating oil to enjoy any downward movement.
Retail customers will have to pony up about $4.50 a gallon by Dec. Next year,
however, the average for the year will be 15¢ a gallon or so lower than in 2008.
Consumers will put the savings into dining out, shopping and home repairs,
while firms will ponder adding workers and investing in new plants and equipment.

There’s no magic in the oil price decline: There are no shortages. And demand is softening.Oil producers are watching anxiously as individualsand firms permanently adopt energy saving measures.Drivers who converted to hybrid cars, for example,won’t return to gas-guzzling SUVs and pickup trucks.The drop in gasoline prices may spur a bit more driving,but not enough to return pump prices to previous peaks.