The common thought is that Congress’s inability to compromise on fiscal issues is holding the economy back when, in fact, they may be having a positive effect.
In addition to retailers, investment bankers and lawyers had a busy end to 2012, scurrying to complete deals before the then current tax laws were due to expire January 1, 2013.
At the least, the fiscal cliff seems to have done little to slow the economy except on the business
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Hours worked in December were up for the first time that wages also increased. The number of jobs added in December was in line with the monthly average.
This means companies were increasing their business activity instead of slowing down as previously anticipated although business investment was down in the fourth quarter.
The takeaway is that the polarization in Washington may not have harmed the economy
as much as investors feared.
As the debt ceiling gets closer, economic worries may come to the forefront once again.