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Sep 24: Debt Ceiling Fears Gathering Strength - Economic Highlights
9/24/2013 9:53:00 AM
Some people just can't stand prosperity. Do we now include the entire U.S. government in this group?
Early this year, economists were looking for growth to strengthen and accelerate, largely based on a comeback in the housing market. So what did Congress do? Implemented a payroll tax increase and let the sequester happen, which shrank potential GDP increases at least a couple of percentage points in the first half of calendar 2013.
Here we are on the back-side of the year, with Europe's problems receding and U.S. consumers beginning to demonstrate some purchasing strength. And now Congress is threatening to shut down the government? Refusing to raise the debt ceiling? In the service of… instability in the markets more than anything else, let's face it.
Say what you will about professional politicians -- and there's a lot you can say I can't repeat here -- but politicians in DC these days are just as likely to have studied dentistry or owned a construction company than studied political science or economics. So perhaps we may be forgiven for seeing the Capitol as having been overrun by a group of amateurs. (Note: my opinions are not necessarily those of Zacks Investment Research.)
In the relatively sane world, top-tier homebuilder Lennar ( LEN ) posted a big positive surprise in quarterly earnings this morning. The company improved EPS 39% year over year and revenues 46%. Lennar is a good indicator of continued strength within the homebuilding sector overall.
Elsewhere, CarMax ( KMX ) beat on both the top and bottom lines, and National Oilwell Varco ( NOV ) announced plans to spin off its distribution business sometime in early 2014. And China has lifted a far reaching media ban on access to U.S.-based websites, which could be a tailwind for Facebook ( FB ) and The New York Times ( NYT ).
After the Fed's shocker last week to keep QE buybacks in the near term, it's got me thinking: even though we're a couple weeks or so away from getting a look at the Fed minutes from its most recent meeting, is it possible the members of the FOMC weighed (like an albatross) the possibility of congressional bumbling in their decision not to taper? Just wondering.
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