HAPPY NEW YEAR!
Twelve months ago, a series of relatively obscure concepts dominated the national conversation; they were Fiscal Cliff, Bush Tax Cuts, 2010 Tax Relief Act, Budget Control Act of 2011, Debt Ceiling, Budget Sequestration, and American Taxpayer Relief Act of 2012. Despite President Obama’s freshly minted reelection, the GOP-T Party tandem threatened to plunge the country into an economic morass by refusing to vote for any measure that resulted in tax increases. Their posture led to an impasse, the consequences of which, Federal Reserve Chairman Ben Bernanke described as, “a massive fiscal cliff of large spending cuts and tax increases.” The popular assessment at the time, including an estimate by the Congressional Budget Office, was that such action would lead to another recession.
By virtue of reaching consensus on a on a bill the U.S. House of Representatives passed around 11:00 p.m. on New Year’s Eve, and that the U.S. Senate subsequently approved around 2:00 a.m. New Year’s Day, our country averted the pending crisis. President Obama signed the bill into law later during the day.
A number of pivotal actions dominated our national conversation during 2013. From my vantage point, the two that established the most traction were the GOP-T Party Government Shutdown and the Obama Administration’s Affordable Care Act (ACA/Obamacare) website rollout. Both may pose deleterious implications for their respective Parties during the 2014 mid-term elections. While it’s too soon to hazard a guess about which may create the greater drag effect on respective Party aspirations, it is worth noting that the GOP opted to negotiate a year-ending budget deal with Democrats, rather than threaten a second shutdown. Meanwhile, the President and his Party continue to look for inventive ways to deflect the unabated pummeling courtesy of the rollout gaffe.
Still, there is good news, as the country ends the year on an economic uptick. Arguments persist that any economic rally continues to settle on Wall Street, while eluding Main Street. The unemployment rate, while at its lowest in 5 years, remains too high, under employment is trenchantly stubborn, and discouraged workers are streaming out of the workforce. All this is true, yet, it must be noted, this coin has a flip side.
The Dow Jones Industrial Average (DJIA) reached an all-time high…52 times in 2013. That’s once a week all year long, on average. The Standard & Poor’s (S&P) 500 ended the year at an all-time high. The National Association of Securities Dealers Automated Quotations (NASDAQ) ended at its highest level in 13 years.
Critics of President Obama are quick to opine that he does not control, nor have any impact on Wall Street. Interestingly, this same element is just as quick to argue vociferously and incessantly that his economic polices are the main
impediment whenever there is an economic downturn. Such selectively inconsistent analysis of facts is the one of the most farcical aspects of Obama critics as a class. In essence, they contend that every negative turn of events is attributable to the President, while any and all positive outcomes are in spite of him and/or his actions. Who needs a perfect storm when the facts are simply, “whatever you say?”
In summary, just how dramatic was the 2013 upswing? When viewed independently, the performance increases look thusly:
- DJIA 26%
- S&P 500 29%
- NASDAQ 38%
Do we still have aspects of the great American economic engine that need to be more finely tuned? Yes, of course we do. However, considered strictly on its merits, the economy is markedly improved. Employment data remains nettlesome and requires direct policy intervention. Alternately, housing data (Housing prices rose 11% in 2013), deficit reduction (409 $billion reduction in 2013), and especially the Stock Market responded in bullish fashion in 2013. “What a Difference a Year Makes!”
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