Pretty much since 2009, analysts and economists have held out hope that next year cold be the year that things return to normal. And each year has been something of a disappointment.
Each year since the crisis has seen pretty weak growth, and some kind of roadblock to growth (Fiscal Cliff, sequester, debt ceiling, European disaster, etc.).
Now two things seem to be happening.
One is that Washington might actually get out of the way and not screw things up.
Greg Valliere at Potomac Research explains:
THE “NO MAS” BUDGET DEAL: Congress seems emotionally spent, willing to throw in the towel and take “small ball” deals; a long holiday break beckons. So we think there will be a budget deal within the next couple of days, along with short-term compromises on unemployment insurance, the “doc fix” and other pending bills. Much of the heavy lifting can wait until later this winter, as PRG’s Suzanne Clark pointed out in her piece yesterday.
WHY THE BUDGET DEAL IS IMPORTANT: As we wrote early last week, Washington will not contribute much of a headwind for the economy 2014 — just a gentle breeze. The pending 21-month budget deal will soften the sequester (while coming up with offsetting savings), and will greatly reduce the uncertainty over fiscal issues. And, of course, the deficit continues to plunge.
Meanwhile, the US economy seems to be gathering a head of steam.
Jobs numbers are firming up. Auto sales are growing like crazy. Gasoline prices are dropping. State and local governments are no longer shedding workers. Credit is expanding nicely to both businesses and households.
So we have a semblance of real self-reinforcing momentum and a moment in politics where politicians might not press the self-destruct button. There’s still always the Fed of course, though it would be beyond ironic if the start of the supposedly dovish Yellen tenure coincided with actions that actually held the economy back just as it was really getting going.
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