With no economic data coming through and with the next date for a fiscal debate yet to be set I am making the final holiday purchasing decisions in the dark. It will be interesting to see if my gut feeling was right or wrong.
The forecast for this year points to moderate growth. I think that December this year can post better-than-expected growth over last year because last year was disappointing. I am pretending that the default will not happen and that our politicians will be gracious enough this year to keep themselves out of the spotlight until January or later.
After the last Bernanke postponement, I have noticed that interest rates, including mortgage rates, have dropped and the housing market, which seemed to have fallen dormant is definitely showing signs of revival in my neighborhood–whether this is a national trend we’ll get to see when economic data resumes.
In summary, the economy seems to be holding up its slow, but growing, pace. I also still think that a real recovery (sustained 3% growth or higher for at least a couple of years) could happen before the next recession hits. Yet, that is starting to look like wishful thinking because our fiscal policy appears to be leaning towards austerity for a while. Perhaps I should stop wishing for it as a mild recovery might be a sign of the necessary de-leveraging of household and it might suggest that the next recession will be milder than the last.