Economy Watch: No Cliff Deal Over the Weekend
- Dec 31, 2012
Congress came back after a short Christmas break, but as of Sunday night the solons hadn’t agreed to any plan of action to avoid the colorfully but not quite accurately named fiscal cliff. The idea was for the Senate to hammer out some kind of deal over the weekend, then roll out the legislation on Sunday night, with plans to vote on it and pass it along to the House of Representatives on Monday. But it wasn’t to be.
Congress will continue to hash the matter out on Monday, which isn’t merely the last day of the year but the deadline that Congress set in the summer of 2011, when the end of 2012 must have seemed far away. Should the matter carry over into January, the most immediate impact would be on the long-term unemployed, whose extended emergency unemployment benefits (about $40 billion over the course of 2013) would dry up at once. The other consequences of the cliff, such as the broad-based tax hikes and the meat-ax approach to cutting federal spending, would take a bit longer to start causing pain.
Investors are already nervous over the prospect of no deal. U.S. equities markets have been trending down lately, and as of Sunday night, Dow and S&P futures were also down. Also as of Sunday night (Monday morning in Asia), most of the Asian exchanges were down.
Pending homes sales up
The National Association of Realtors reported on Friday that its Pending Home Sales Index, which is based on a contracts inked but not closed, rose 1.7 percent to 106.4 in November from a downwardly revised 104.6 in October. The index is 9.8 percent above November 2011, when it was 96.9.
According to NAR, the Pending Home Sales Index is at the highest level since April 2010 when it hit 111.3 as buyers were rushing to beat the deadline for the homebuyer tax credit. With the exception of the months affected by tax-credit stimulus that year, the last time there was a higher reading for pending sales was in February 2007, when the index reached 107.9.
The improvement is another indication that the revival of the housing market in 2012 might well have enough legs to continue in 2013. Other recent indicators have been positive as well, such as the growth in new and existing home sales (year-over-year), the increasing prices for homes in most U.S. markets and the dwindling inventories of for-sale properties in most markets.
U.S. population growth slows
The Census Bureau said on Friday that it projects that the population of the United States will be about 315 million on New Year’s Day 2013—or 315,091,138, to be pedantically precise. That’s up about 2.2 million since the last time the bureau took a population snapshot, which was on Apr. 1, 2010.
In January 2013, there will be one U.S. birth every eight seconds, and one death every 12 seconds. Yet according to the bureau the country’s projected population in 2050 will be about 400 million, rather than the 439 million or so it projected four years ago. Birth rates have dropped since then, and so have net immigration rates, both of which will have a long-term impact on the population.
On Friday, Wall Street seemed preoccupied by the fiscal cliff. The Dow Jones Industrial Average lost 158.2 points, or 1.21 percent, while the S&P 500 and the Nasdaq were down 1.1 percent and 0.86 percent, respectively.