It was a big week for non-metrical economic data. A federal budget deal is in the works. The House of Representatives voted 332-94 to approve the budget deal proposed by Wisconsin Republican Paul Ryan and Washington Democrat Patty Murray. The budget is expected to pass the Senate next week. President Obama has signaled that he will sign the two-year budget deal when ratified by the Senate. The budget deal does not address the debt limit, which needs to be raised by late spring. The budget deal also leaves entitlement programs and the federal tax code unreformed. The good economic news is that we have some near-term relief from the budget uncertainty and a marginal boost to federal spending next year, but there is much work to be done.
Stanley Fischer has emerged as President Obama’s choice to fill Janet Yellen’s soon-to-be-vacated seat as vice chairman of the Federal Open Market Committee. Yellen is expected to be approved next week by the full Senate to move over one seat to become the first chairwoman of the FOMC, succeeding Ben Bernanke this coming March. Fischer, who holds duel citizenship with Israel, served as head of the Bank of Israel from 2005 through last June. He also taught Ben Bernanke at the Massachusetts Institute of Technology. Fischer’s resume includes time as vice chairman of Citigroup and deputy director of the International Monetary Fund.
Mexico’s Chamber of Deputies (its lower house of congress) approved a bill to allow private international investment in the energy sector. The bill is expected to be ratified by the state assemblies. The passage of the landmark legislation is being hailed as the most significant economic event in Mexico since the implementation of the North American Free Trade Act (NAFTA). There are massive underdeveloped oil and gas reserves in Mexico. The economic accelerator from energy sector development in Mexico has the potential to spawn significant synergies with its manufacturing sector and emergent middle class consumer sector. The current population of Mexico is estimated at 117 million, about one-third that of the U.S.
U.S. energy companies are lobbying to lift export restrictions on crude oil and natural gas that date back to the OPEC oil embargo of 1973. Lifting these restrictions would have a significant positive impact on the U.S. balance of trade. The U.S. is on pace to become the world’s largest oil producer next year, according to the International Energy Agency.
U.S. economic metrics for the week were consistent with an ongoing economic recovery and a bounce-back from October’s federal government shutdown. Retail sales for November increased by a sizeable 0.7 percent, aided by light vehicle sales which hit a 16.4 million unit annual rate for the month. Non-auto retail sales gained 0.4 percent in November.
For a PDF version of the Comerica Economic Weekly, including forecast tables and the variables calendar, click here: CMAEconWeekly121313.