Here are some economic nuggets from the past two weeks’ news headlines and industry publications.

  1. The fiscal cliff — automatic tax increases and huge, across the board spending cuts starting at the beginning of 2013 — is looming. House Speaker Boehner and President Obama continue negotiations. An agreement seems likely, but not before the last possible minute or beyond. Raising the federal debt ceiling is expected to be part of the deal. Many companies have delayed hiring and investment plans to see what that agreement is, or even if there is an agreement.
  3. A press release from the Federal Reserve laid out the parameters for determining when the Fed will begin to increase the federal funds rate (a rate that financial institutions charge each other for short-term loans). As long as inflation does not rise above 2.5%, when the unemployment rate falls to 6.5% or lower, the Fed will begin the process of draining liquidity from financial markets, increasing the federal funds rate.
  5. Long-term interest rates are likely to rise in advance of such moves by the Fed as the financial markets anticipate the Fed’s actions. Given current projections for the economy, the Fed is unlikely to raise rates before 2015. Inflation exceeding 2.5% would trigger higher rates sooner.
  7. The press release also announced that the Fed will continue its program of purchasing $40 billion of additional agency mortgage-backed securities per month in support of the mortgage market (and consequently, the housing market).  Also, the Fed plans to purchase $45 billion per month of longer-term Treasury securities after its program to extend the average maturity of its holdings of Treasury securities is completed this month.

  8. Nonfarm payroll employment increased 146,000 seasonally adjusted (SA) in November,  better than expected given the anticipated effects of Hurricane Sandy. The positive news was tempered somewhat by the downward revision of the September and October gains, 16,000 and 33,000 lower than originally reported,  respectively. The unemployment rate fell from 7.9% in October to 7.7%.

  9. The November not seasonally adjusted (NSA) unemployment rate for construction workers was 12.2%, down from 13.1% in November 2011. However, the decrease in the rate is due to workers leaving the industry for jobs elsewhere, retiring,  or leaving the labor force altogether.

  10. Total commercial construction spending increased for the seventh consecutive month, up 1.4% in October to $872.1 billion at a seasonally adjusted annual rate (SAAR). Meanwhile, year-to-date NSA spending was 9.3% higher than the same period last year. The October spending figure includes the following:
    • Nonresidential construction spending advanced 0.8% to $302.8 billion, and was up 6.6% on a year-to-date basis from a year ago
    • Heavy engineering construction spending edged up 0.2% to $268.5 billion, and was 8.5% higher on a year-to-date from the same period last year
    • New residential construction spending climbed 3.9% to $171.1 billion, and increased 17.4% on a year-to-date basis over the same period in 2011
  1. The November Producer Price Index (PPI) for finished goods dropped 0.8% (SA) after falling 0.2% in October. The two monthly decreases were due to lower energy prices. On a year-over-year NSA basis, the index was up 1.5%.
  3. A price index for inputs used in nonresidential construction, excluding capital equipment, tumbled 1.3% (NSA) in November after shrinking 0.5% in October. The index was 0.6% higher than it was in November 2011.

  4. The November Consumer Price Index (CPI) slid 0.3% after edging up 0.1% in October. The CPI was 1.8% (NSA) higher than November of last year. Core CPI (which excludes food and energy prices) notched up 0.1% higher and was up 1.9% (NSA) from November 2011.