The Big Deal About The Deal

Oct. 18, 2013
The deal over the shutdown is good near-term news, but doesn’t change long-term economic realities.

I am as happy as you are that the US Congress and the president reached a deal that allowed the debt ceiling to be temporarily dealt with and the government to be temporarily funded.  I am also happy that the political theater did not last more than three weeks, which is what we anticipated.

So is this a big deal?  No, it is not.  You know as well as I do that all they did was to kick the can down the road, again.  This will buy Congress enough time to work out a more or less semi-functional solution that will not fundamentally change anything.  Thus we are still on track with our forecast for recession in 2014, 2019, and the Great Depression of 2030. 

The deal does not alter any of the warning signs for 2014 that we have presented in the ITR Trends Report or in the ITR Advisor.  The problems, irritants, and headwinds remain in place.  Housing, automobile production, and key leading indicator trends are still pointing to troubles next year.  Don’t let the optimism of the moment carry into tomorrow.  Please be sure to have your budget reflect the reality of a mildly negative second-half-2014 if you are positively correlated to the economy.

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