Fourth Quarter 2013 Economic Report
By: Alan Beaulieu, President, ITR
When the federal government shut down, the economy generally rolled on without it. The stock market wasn’t pleased with the shut down, and surely defense contractors and tourist activity around national parks and monuments took a temporary hit. That is the point: so far, the economy took a vague, temporary hit. Prior shutdowns have not resulted in a permanent altering of the course of the economy. Consumers continue to spend, businesses continue to create. We saw the same thing happen this time around.
Had the politicians not been able to reach an agreement to end the shutdown and extend the debt ceiling, the situation could have become much more interesting and maybe trend altering. Maybe. Will the world eschew the US dollar because of this political mess? That is a reasonable question; but perhaps a better question is “where will they go for the long haul if they are concerned about the dollar.” Clearly the dollar lost strength during the debacle, but this should be temporary as well. We don’t see a viable alternative to the US dollar given the economics of the world today.
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