January 29, 2013
Can we get a heaping helping of ridicule for all the reporters and their favorite economic experts who told us that uncertainty over the fiscal cliff was a drag on the economy in the second half of 2012? The data just refuse to comply with this assessment.
Yesterday the Commerce Department reported a big jump in durable goods orders for the month of December. This was right when we stood at the precipice waiting to see if we would slide over the cliff. Orders jumped 4.6 percent for the month. Non-defense capital good orders (excluding aircraft) were up also, although by just 0.2 percent. However, this followed a 3.0 percent rise in November. If uncertainty was supposed to be discouraging investment, the folks making the orders apparently didn’t get the memo.
This also seems to have been the case with employers, since employment increased by 155,000 in December, the same as its average over the last year. Retail sales also rose by a strong 0.5 percent, indicating that consumers were also too dumb to recognize the uncertainty caused by the fiscal cliff.
In short, it seems that the folks who make the relevant economic decisions did not agree with the economic experts. They ignored the uncertainty surrounding the fiscal cliff and just acted as though the boys and girls in Washington would get things worked out without seriously disrupting the economy. And they were right.
Addendum:
Big congrats to Neil Irwin at the Post for nailing this one exactly right today and fessing up to his past mistakes in covering the cliff.
Comments