Markets and businesses are rightly worried about the outcome of fiscal negotiations in Washington, but behind the scenes are signs that U.S. growth is moving to an accelerated trajectory.
The biggest headwind to economic growth - the housing market - is becoming a tailwind. This week, existing home sales and new housing starts both increased, beating market expectations
The turnaround in housing offers an opportunity for policy makers. As Chairman Bernanke said in a speech this week, "cooperation and creativity to deliver fiscal clarity... could help make the new year a very good one for the American economy."
Canada
Financial markets' mood started to improve this week, with equity markets making up some lost ground and the Canadian dollar back above parity.
Canadian data, however, shone a light on the biggest domestic risk to the economy - heavily indebted consumers - and the impact on Canadian retailers.
Consumers can no longer be the engine of economic growth. Add high levels of cross-border shopping and limited pricing power to that modest backdrop, and it would seem Canadian retailers are getting a lump of coal in their stockings this year.
IMOH, Patrick E.
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