As the economy improves, the pressure on Congress to reach a compromise on the budget is lessening. Our first article this week explores how a budget deal that was expected to be reached by August may not be accomplished before October. We next turn to Doug Short for a discussion that includes graphs on the big four economic indicators, which are all trending upwards. We close with an update on the inflation rate. While it continues to fall below the Federal Reserve’s target rate, economists believe the government agency’s credibility is being tested.

Pressure For Budget Deal Dissipates As U.S. Deficit Narrows– Spending is down, revenue collection is up, the budget deficit is narrowing and President Barack Obama might not need to request an increase in the debt limit until October. These developments are undercutting a plan by Republicans to force President Obama and congressional Democrats to make a budget deal before lawmakers take their regular break in August.
http://www.washingtonpost.com/business/economy/as-red-ink-recedes-pressure-fades-for-budget-deal/2013/05/07/5eaaf8b2-b71e-11e2-92f3-f291801936b8_story.html?hpid=z2

The Big Four Economic IndicatorsDoug Short discusses the big four economic indicators and graphically shows the trends, which are improving.  The charts clearly track how the indicators have performed through recessions.
http://advisorperspectives.com/commentaries/dshort_050313.php

Fed’s Credibility Tested As Inflation Drifts Below Target With the inflation rate about half of the Federal Reserve’s 2.0 percent target, the central bank is facing a major test. Some experts wonder whether it will eventually need to ramp up its already aggressive bond buying program.
http://www.reuters.com/article/2013/05/08/us-usa-fed-inflation-idUSBRE94704L20130508

 

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John R. Day, Bill Ennis and Stephanie Davidson

 

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