Tag Archives: fiscal cliff

Sequester: Snow Drifts to Avalanche

Today, the President will meet with leaders of Congress. Unlike the fiscal cliff deal, which averted the worst in tax hikes and delayed the budget cuts associated with sequestration, most in Washington expect NO last minute deal. In response, the President will have to OK cuts that were originally intended to be so indiscriminate and [...]

Hedging Tax Hikes Distorts Income, but Suppresses Spending

Personal disposable income growth jumped 2.8% in December, more than twice the increase in November. All of that acceleration may be attributed to special dividends and early bonuses that were released to top income earners by their employers as a way to avoid higher income taxes associated with the fiscal cliff negotiations. Indeed, personal disposable [...]

Fiscal Cliff Update

My political handicapping friends tell me that a deal is likely to be delayed now, for a bigger deal in a month. Congress can pass a continuing resolution (funding bill) as late as December 31, likely the 30th. This would buy time to negotiate a larger deal including long-term deficit reduction and corporate tax reform. [...]

Spending Rebounds after Sandy; Durable Goods Orders Firm

Personal incomes and spending both rebounded in November, as consumers took advantage of holiday promotions and caught up on spending postponed during Superstorm Sandy, which hit the Northeast at the end of October and was followed by another big storm. Cleanup and replacement efforts have begun in some, but not all, of the worst affected [...]

Home Sales Rebound after Sandy

Existing home sales rose to a 5.04 million-unit, annualized rate in November after being revised down on Sandy-related losses in October. Gains were broad-based and occurred in all regions. Co-op and condo sales, which had been weaker than single family home sales, showed particular strength. That is likely due to the bounce-back in demand in [...]

Housing Starts Drop on Sandy Disruptions

Housing starts fell to an 861,000 unit annualized pace in November, as the effects of the two storms that hit the East Coast – Sandy and the Nor’easter – continued to disrupt construction activity.  Many construction projects were temporarily sidelined because workers were initially focused on cleanup efforts and restoring electricity. Almost all of the [...]

Residential and Lodging Boost Construction Spending

Construction spending rose 1.4% in October from September, driven by gains in residential construction. Both multi and single family construction posted gains, but for the moment, multifamily construction (mostly apartments) is driving the rise in the overall market; multifamily construction is up a whopping 42.5% from a year ago, while single-family construction is up 17.3%. [...]

Q3 GDP Boosted by Sharp Increase in Defense Outlays

Real GDP increased at a 2% annual rate in the third quarter, buoyed by an unexpected and unsustainable rebound in federal government spending. Defense outlays increased at a double-digit rate, indicating a surge in operations and maintenance:  largely installations support, weapons and service support. This coincides with a transfer payment to Afghanistan, which is not [...]

Durable Goods Orders Plummet, GDP Revised Down on Drought

Durable goods orders plummeted 13.2%, the largest decrease since January 2009. The data was not as bad excluding transportation, which showed huge declines in both aircraft and motor vehicles. We also saw very large declines in defense orders, which reflect the pullback in Iraq. There also could be some hesitation on the defense front as [...]

Trade Deficit Treads Water as Global Growth Slows

The trade deficit widened ever so slightly to $42 billion in July, up from $41.9 billion in June. Both exports and imports slowed in response to weakening demand. The drop in exports was broad-based and included losses in industrial supplies and materials, motor vehicles and consumer goods. There was an increase in exports of foods, [...]