Tag Archives: Fiscal cliff

At the end of the classic ""Miracle on 34th Street,"" Fred Gailey—fresh from proving department store Santa Kris Kringle is the Santa Claus—muses aloud, ""Maybe I didn't do such a wonderful thing after all"" when (spoiler alert) he spots Kringle's cane in a vacant, for-sale house his soon-to-be stepdaughter Susie has dreamed of. Perhaps critics of sequester may not have been doing such a ""wonderful thing"" when they argued that across-the-board cuts would have a crippling effect on the nation's economy because of the importance of government spending's ripple effect. Those critics, of course, had statistics on their side.

The nation’s economy grew at a 1.7 percent annual rate in the second quarter, the Bureau of Economic Analysis reported Wednesday. Growth exceeded economist forecasts but remained slower than the growth rate needed to add jobs. In the first quarter, GDP grew 1.1 percent and in the second quarter last year, the economy grew at a 1.2 percent annualized rate.

Last month's uptick in consumer confidence suggests consumers may not be too concerned about pending impacts of fiscal policy, but Fannie Mae predicts they will nonetheless feel some financial tightening over the next few months. Several economic indicators are trending positive right now, but the GSE's March economic forecast warns the pending sequestration and the effects of higher social security taxes may dampen some of the current progress. On the other hand, the GSE continues to see housing as a bright spot in the economy--one that is not likely to darken in the near future.

Personal income dropped $505.5 billion, or 3.6 percent, and disposable personal income (DPI) fell $491.4 billion, or 4.0 percent, in January, the Bureau of Economic Analysis, reported Friday. Personal consumption expenditures (PCE) increased $18.2 billion, or 0.2 percent in January. In December, personal income increased $353.4 billion, or 2.6 percent, DPI increased $325.7 billion, or 2.7 percent, and PCE increased $14.8 billion, or 0.1 percent, based on revised estimates.

Personal income jumped a staggering 2.6 percent in December, almost four times the 0.7 increase economists forecast, the Bureau of Economic Analysis (BEA) reported Thursday. Personal consumption spending rose 0.2 percent, slightly below the expected 0.3 percent increase. The sharp December gain came from special dividends paid by many companies in anticipation of changes in individual income tax rates, which were tied into negotiations to avoid the ""fiscal cliff.""

While some are asking when the economy will return to normal, others are wondering if this prolonged period of below-potential GDP growth is actually the ""new normal,"" according to a report from Fannie Mae's (FNMA/OTC) Economic & Strategic Research Group. For 2013 and 2014, Fannie Mae projects a continuation of below-potential economic growth, with a 2 percent growth rate expected for 2013, similar to the lackluster performance seen in 2012.

First-time claims for unemployment insurance fell to another five-year low for the week ending January 19, dropping 5,000 to 330,000, the Labor Department reported Thursday. Economists expected claims to increase to 360,000 from the prior week. The previous week's report was unchanged at 365,000, which had been the lowest level since January 2008.

First-time claims for unemployment insurance plunged 37,000 for the week ending January 12 to 335,000, the lowest level since January 2008, the Labor Department reported Thursday. Economists expected claims to drop to 368,000 from the prior week.

Builder confidence stalled in January as the Housing Market Index (HMI) stood at 47, remaining at its highest level since April 2006, the National Association of Home Builders reported Wednesday. Economists had expected the index to tick up to 48.

President Obama opened a big hole in his White House by tapping Jack Lew to replace Timothy Geithner as Secretary of the Treasury, leaving empty for the moment the role of Chief of Staff. Meanwhile, it may take a while before the impact of the long-awaited Consumer Financial Protection Bureau's rules on qualified mortgages will be felt. The CFPB heard the pleas of lenders and housing advocates to avoid taking steps to slow the incipient housing recovery.