Economy Watch: Debt Ceiling Lumbers Back Onto National Stage
- Feb 11, 2014
It’s a familiar story: the U.S. Department of the Treasury tells the nation – and the world, including investors in Treasuries – that the time is quickly approaching to raise the nation’s debt ceiling. In the summer of 2011, the matter proved deeply contentious in Congress, action was put off until the last minute, and there was a short-lived crisis of confidence in the economy. Last year, the issue was tangled up with the shutdown of the federal government, no one seemed to believe that Congress would allow the country to default, and in the end, the debt ceiling was raised.
This third time around (since 2011), the situation hasn’t caused a lot of political or economic fireworks (yet). Last month, Treasury Secretary Jack Lew said that the federal government had until roughly the end of this month before it ran out of money to pay for spending already authorized by law (that is, Congress). Since then some noises have come from Congress about attaching conditions to raising the debt ceiling, but the political will for another fracas over the debt ceiling seems weak.
According to published reports on Monday, the leadership of the House majority was working on a bill that would raise the debt ceiling, as well as make a few politically popular adjustments to government spending, such as a bump up in a cost-of-living increase for veterans’ pensions. Meantime, the House minority is insisting on a debt ceiling measure with no strings attached. A House vote could come as soon as Wednesday on some version of the debt ceiling measure, and most observers expect the ceiling to be raised again, probably with votes from both sides of the aisle, as happened last year. Investors didn’t seem to be too worried about the whole matter on Monday, with equities markets moving only tepidly.
Vegas Housing Market Closer to Recovery
The Greater Las Vegas Association of Realtors reported local sales figures for January sales on Monday, some of which point to a partial—though not total—recovery for this bellwether market, which is worth following in some detail because it was crushed so completely by the housing crisis and subsequent recession. The main hopeful data point for Vegas: in January 2014, 72 percent of residential sales marketwide were conventional, not REO or short sales. In January 2013, only 51.3 percent of sales were conventional.
Investors—or speculators—aren’t quite the presence in the market that they used to be, either. GLVAR reported that 46.3 percent of all existing local homes sold in January traded hands for cash. That’s an uptick from 44.4 percent in December, but considerably down from 59.5 percent in February 2013, which was the most recent peak for that metric.
Local housing inventories are up as well. According to GLVAR, many more available homes are now listed for sale without any sort of pending or contingent offer than previously. By the end of January, according to the Realtors, 6,541 single-family homes were listed without any sort of offer. That’s down 0.7 percent from December, but still up a whopping 96.2 percent from a year ago.
Wall Street had a modest up day on Monday, ahead of Janet Yellen’s first appearance before the House Financial Services Committee as chair of the Federal Reserve on Tuesday, with the Dow Jones Industrial Average up 7.71 points, or 0.05 percent. The S&P 500 rose 0.16 percent and the Nasdaq gained 0.54 percent.