Posts tagged ‘sequestration’

Jan 30

Negative GDP? Think instead, D.G.P. (Don’t Gotta Panic)

Usually when GDP growth unexpectedly drops below zero, economists and markets start screaming “recession!!” With today’s print of GDP (gross domestic product) showing a headline 0.1% contraction, I’d encourage you not to worry too much and think instead about shifting those letters to DGP and remember “Don’t Gotta Panic.”

Today’s initial estimate for fourth-quarter 2012 GDP wasn’t stellar, but it sure was a lot better than the headline 0.1% contraction suggested. Why don’t we have to panic? Read more

Jan 22

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Will Sequestration Just Get Pushed into 2014?

The fiscal cliff deal was not a pretty thing, but it moved the conversation forward. It resolved uncertainty on most of the outstanding tax issues, and we think that it likely helped prevent a tax-hike-induced recession in the United States. That’s part of the deal. Now, we look forward to fixing the other part – spending cuts, or as they call it in Washington, sequestration. The deal hammered out by Congress in the first day of 2013 delayed the automatic spending cuts by two months. So the question is, if they pushed it back once, won’t they just push it again and delay until sometime in 2014?

I don’t think so. I think something is going to happen on the spending cut side. With the new sequestration deadline seemingly on top of the deadline for expansion of the federal debt ceiling, Republicans have some amount of leverage. The problem with delaying the sequestration even to February is the uncertainty that it pushes throughout the federal system. Read more