Good morning. It's been a pretty good week for U.S. economic data. And you know what that means, right? Let's get started with your daily reading:
Closing in on a budget deal
And not a moment too soon. The word is out that the two top dogs -- Senate Budget Committee Chairman Patty Murray and House Budget Committee Chairman Paul Ryan -- are close to an agreement to fund the government starting on Jan. 15. How did they get to yes? According to Bloomberg News, Republicans will agree to a higher level of spending (a relaxation of the sequestration caps) while the Democrats will accept more revenue from user fees instead of tax increases. It's a deal that won't disappoint anyone for the simple reason that no one had expectations of anything grand.
Rosie Scenario is back
The economic news this week has been upbeat, from auto sales to manufacturing surveys to new home sales to ADP's estimate of November employment (+215,000). And when things look good, the talk turns to Fed taper. Cornerstone Macro's Roberto Perli and Andy LaPerriere think another solid employment report on Friday could nudge the Fed in that direction, but "leadership transition issues and an inflation rate that is persistently below the Fed's 2 percent target may contribute to a delay," they write. I tend to agree. Fed policy makers were for tapering (June) before they were against it (September). Even if Friday's jobs report is strong, no central bank wants to be seen as relying on one number -- make that one highly revised number -- to determine policy.
CEOs are a bit more optimistic
Chief executive officers turned a bit more bullish on the U.S. economy in the fourth quarter, according to the Business Roundtable's CEO Economic Outlook Survey. The index, which measures expectations for sales, capital spending and hiring in the next six months, rose more than 5 points to 84.5, the highest since the second quarter of 2012. Just for some context, the index is well below the post-recession peak of 113 in the first quarter of 2011. The biggest concern (39 percent) is regulatory costs, followed by labor (25 percent) and health care (21 percent) costs. An independent study found that the index is a leading indicator of GDP growth. We'll see.
Millennials are losing faith in President Obama
More than half of the 18-29 year olds surveyed by Harvard's Institute of Politics disapprove of Obamacare and say it will increase their healthcare costs. Forty percent expect the quality of care to deteriorate. And almost half said they would not enroll via the government's health exchange even if eligible. What exactly is the problem? A failure to communicate the law's benefits to the digitally-driven youths of today, according to Trey Grayson, the Harvard Institute's director. And communication is supposed to be Obama's strong suit! In order for the Obamacare arithmetic to work, enough young, healthy people, who don't demand much in the way of healthcare services, need to sign up to offset the costs of those who are sick. Unless they do, premiums for everyone else will skyrocket. Don't be surprised if Obama pivots to college campuses for his next campaign tour.
What exactly does a do-nothing Congress do?
It ponders life on another planet. The 90-minute hearing yesterday into life beyond our solar system failed to resolve the question of whether human beings are alone in the universe, according to the Washington Post. Still, the scientists who testified advocated for funding in the field. The House Science Committee was respectful toward its witnesses. Those outside the committee, less so. The Democratic Congressional Campaign Committee's Emily Bittner put it this way: "No wonder the American people think this Republican Congress is from another planet —- they're more interested in life in space than Americans' lives."
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