The “fiscal cliff” is likely to loom over all other economic news this week, as debate continues over the details of any plan to shape tax and spending policy.
That said, economists don’t expect the markets to panic and the economy to crater immediately if Congress and the White House fail to pass a compromise. Overall, the consensus is that legislators have a few weeks left before inaction causes the economy to fall again into a recession. And the other fundamentals of the economy — housing and jobs — continue to look relatively healthy in the meantime. Here are the main indicators that analysts will likely be following during this shortened holiday week:
Housing indicators are still trending positive, with home prices and new-home sales increasing. Analysts expect construction spending, likewise, to have increased 0.6 percent in November, driven both by gains in private residential construction and an expiring wind tax credit that has fueled nonresidential building in power structures.
Meanwhile, the ISM manufacturing index is projected to have improved slightly in December, rising to 50.3, from 49.5 last month.
Motor-vehicle sales are expected to have dropped slightly in December, falling from 15.5 million in November to 15.3 million. Analysts, though, considered the figure to be relatively strong, supported by large inventories and year-end bargains.
Despite the shadow of the fiscal cliff, jobs numbers for December are expected to be another positive trend. Analysts predict that non-farm payrolls will have increased by 150,000 in December, up from 146,000 in November. The unemployment rate is expected to remain the same, at 7.7 percent. After an uptick following Hurricane Sandy, initial unemployment claims dropped sharply. Construction-related employment also is expected to bounce back after a slowdown that may have been related to the hurricane.