After three weeks of political wrangling, the federal government is open and the debt ceiling has been increased. The good news/bad news is that there's a 90-day grace period before the next potential round of budget/debt ceiling debates. Now the fun begins: parsing the deluge of delayed economic reports and trying to figure out where the economy stands.
Global/U.S. Growth Before the shutdown, there was ample evidence that the global economy was picking up steam. The rebound in China helped alleviate worries over a "hard landing," the eurozone finally emerged from recession, Japan remains relatively strong, and the slowdown in emerging markets is picking up as worldwide demand increases.
In the United States, the recovery was gaining momentum, until the two-headed monster of the government shutdown and debt-ceiling debate reared its ugly head. Moody's Analytics estimates that the whole fiasco cost $22 billion, and Standard & Poor's estimates the closure has shaved 0.6 percent from fourth quarter growth. As a result, the quarter that includes October, November, December should expand by only 2 percent, though analysts are hopeful the hit to growth will be a blip and 2014 will make up for the short-term damage.
That said, if congressional fighting recurs in January and February, there could be more "blips" on the radar screen. Additionally, if the next round of sequester cuts goes into effect, U.S. growth could be hampered in 2014.
Jobs Over the first eight months of the year, the economy has added an average of 180,000 nonfarm positions per month, but the August and July numbers were weaker than expected. The economy has added 6.8 million total jobs (7.5 million private-sector jobs) since employment bottomed out in February 2010. There are still 1.4 million fewer private-sector jobs now than when the recession started in 2007.
Housing The recent increase in mortgage rates combined with rising inventories will likely slow down the sizzling pace of the housing recovery but shouldn't snuff it out entirely. Housing should continue to be a positive force in the economy.
Consumers It was hard to hit the stores with gusto when the government was shut down and the United States was on the verge of defaulting on its obligations. ShopperTrak said that total retail store shopper traffic during the week of Sept. 29-Oct. 5 decreased 7.5 percent compared to the same period last year. During the week of Oct. 6-12, foot traffic decreased 7.1 percent compared to 2012. But consumers are a mercurial bunch, and visions of sugarplums may help them forget about Washington and engage in a bit of retail therapy during the holiday season.
Federal Reserve Remember way back in September when chairman Ben Bernanke raised the concern over "fiscal uncertainty"? That fear was well founded and probably the main reason the central bank kept its current policies in place, including the $85 billion worth of monthly bond purchases. There is one more policy meeting before the end of the year, in December. If the economy were to pick up substantially, there is a chance of a small pull back in bond purchases at the December meeting. It is more likely that Bernanke would use his last Federal Open Market Committee meeting in January to change course, unless fiscal uncertainty returns to the fore. If things heat up in Congress, Bernanke's successor, Janet Yellen, may use her first committee meeting to announce the reduction in bond purchases.
Markets Investors typically do not like uncertainty -- except when they brushed aside worries over the debt ceiling and then celebrated when the deal was sealed. With indexes up sharply on the year, optimists are touting a resurgent economy and decent earnings. Pessimists point out that the bulls are confusing avoiding disaster with real progress.
Congress Are we in for déjà vu all over again? The agreed upon three-month time horizon has invoked a chorus of "kick the can down the road," but wait, it could last even longer! The debt ceiling date of Feb. 7 could be extended when U.S. Treasury Secretary Jack Lew and the Treasury invoke extraordinary measures.
Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.