From the NY Times: Obama Says G.O.P. Won’t Get ‘Ransom’ to Lift Debt Limit
“They will not collect a ransom in exchange for not crashing the American economy,” Mr. Obama vowed in the East Room, a week before his second inauguration. “The financial well-being of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip.”
CR note: The “debt limit” is not about spending – it is about paying the bills.
The key in the short term is to NOT reduce the deficit too quickly (the fiscal agreement will probably add a 1.5% drag to the economy in 2013). The key in the long term is put the debt on a sustainable path. These are not contradictory, and right now we are on a path to reduce the deficit to about 3% of GDP in 2015. That is about the right pace following the financial crisis. That gives policymakers time to address the long run issues.
Tuesday economic releases:
• At 8:30 AM ET, Retail sales for December will be released. There have been a number of reports of “soft” holiday retail sales. The consensus is for retail sales to increase 0.2% in December, and to increase 0.3% ex-autos..
• Also at 8:30 AM, the BLS will release the Producer Price Index for December. The consensus is for a 0.1% decrease in producer prices (0.2% increase in core).
• Also at 8:30 AM, the NY Fed Empire Manufacturing Survey for January will be released. The consensus is for a reading of 0.0, up from minus 8.1 in December (below zero is contraction).
• Also at 8:30 AM, Corelogic will release their House Price Index for November 2012.
• At 10:00 AM, the Manufacturing and Trade: Inventories and Sales (business inventories) report will be released.