Pre-holiday economic cheer limited

We are less than a week away from Christmas, but there will be little cheer on Wall Street until leaders in Washington can agree to a solution to avert the so-called "fiscal cliff" of automatic tax hikes and spending cuts set to kick in on January 1.

President Barack Obama and House Speaker John Speaker have reportedly discussed the issue several times both in person and on the phone, but little progress appears to be made.

On the bright side, both parties say that "lines of communication remain open."

Economists on Wall Street still expect an agreement to be reached before the deadline, even if politicians cut it dangerously close.

"It's really dangerous for either party not to get it resolved because we have Congressional elections in a couple of years and either party could be blamed if they don't," said Yelena Shulyatyeva, an economist at BNP Paribas, adding that the resolution could be an "11 p.m. decision."

As fiscal cliff worries continue to weigh on the economy, Wall Street is hoping that the housing sector, which has been a bright spot this year, will provide some relief.

November data for sales of existing homes is out Thursday and economists expect a 2.3% improvement.

The number of new housing constructions is expected to decline slightly, warned Shulyatyeva, but that is a temporary effect of to Superstorm Sandy that will wear off in the next month.