The economy is holding up well in an age of austerity. “Housing prices rose faster over the past year than they have in the past seven, according to data out Tuesday. Consumer confidence hit its highest level in five years. The stock market rallied another 0.6 percent as measured by the Standard & Poor’s 500, leaving it just short of an all-time high reached last week. And the national retail price of gasoline fell for six days straight through Monday and is down 16 cents a gallon since late February…It adds up to this reality: In a year when tax increases and spending cuts by the federal government were expected to bleed life out of the economy, the strengthening housing and financial markets are proving to be more powerful than acts of Congress.” Neil Irwin and Ylan Q. Mui in The Washington Post.
Why hasn’t there been more of a drag? “At the start of the year, it looked like 2013 would be a battle between positive and negative forces shaping the economy…So far, the positives seem to be winning…Meanwhile, the direct evidence that tighter fiscal policy is damaging growth is scarce, so far at least; study the internal details of major economic reports, and even if you squint you don’t see a lot of concrete evidence of the squeeze.”