Review: President Obama’s win in the US presidential election, with Democrats retaining the Senate and the Republicans retaining the House means more of the same in terms of divided US government.
Attention has now turned to the need to scale back the fiscal cliff of tax hikes and spending cuts by year-end, the need to raise the debt ceiling by March and the need to come up with a long-term plan to get America’s budget under control in order to avoid more ratings downgrades. US financial activity has been improving, but economic data has been mixed.
America’s labour market improved further in October with a stronger-than-expected 171,000 gain in payrolls, although the unemployment rate ticked up marginally to 7.9%. The trade deficit was much smaller than expected in September and construction and inventories data was also stronger. October’s National Association of Home Builders survey also rose, suggesting a solid recovery.
Meanwhile there was a slight fall in the non-manufacturing Institute for Supply Management index and falls in retail sales in September. Overall, growth in the US is continuing but is still not strong enough to satisfy the US Federal Reserve (Fed). Hurricane Sandy and fiscal cliff worries will also weigh in the short term. Expect Fed stimulus to continue.
The European Central Bank (ECB) made no change.