Dodged One Bullet, But…

January 28, 2013

The first batch of major economic statistics for 2013, as well as remaining information for 2012, is
released this week.
-Jason D. Pride, director of investment strategy, Glenmede

Dodged One Bullet, But…

- The Republican-controlled House voted to extend the debt ceiling through at least May, giving the
economy somewhat more breathing room. This is, however, yet another kick-the-can solution, and
does not provide long-term relief from this potential

- Agreement on the sequestration, and later, the continuing budget resolution, however, remain very real threats. Politicians on both sides of the aisle in both chambers of Congress expect the spending cuts to kick in as negotiations begin anew, adding to the already extant drag from government action this year. The March 1st date is also quite close to a potential late-March federal shutdown.

- The change to government spending enacted by the American Taxpayer Relief Act (ATRA) is already in the book. The current deal creates a 0.5%-to-1.0% headwind, but this could move closer to 1.5% or more if negotiations break down and the automatic sequester is permitted to begin. Economists and others continue to watch closely for signs of how significantly higher taxes are affecting growth.


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