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2014

CBO: Debt Ceiling May Be Delayed Until June 2014

Congress voted last month to end the government shutdown and to extend the debt limit through Feb. 7, 2014. Then, on February 8, the U.S. Treasury Department could use “extraordinary measures”, the special accounting maneuvers that let it keep paying the country’s bills without going over the debt limit, to avoid a default.

 

By CBO’s estimate, the Treasury might be unable to fully pay its obligations starting in March, but depending on the timing and magnitude of tax refunds and receipts in February, March, and April, the Treasury might be able to continue borrowing into May or early June.

US Q3 and Q4 GDP Will Be Above Expectations

Data published yesterday suggest that Q3 GDP will be revised upward on December 5th. It is very likely that the figure will be above 3% (QoQ Annualized) following the upward revision of total business inventories in August and a stronger than expected rise in September. Moreover, in the same time, the revision of September retail sales was also positive.

 

According to Census, total business inventories rose 0.6% MoM in September (against 0.3%e MoM) while August data were revised from +0.3% MoM to 0.4% MoM. On the other hand, retail sales were revised in September from +0.3% MoM to 0.4% MoM.

 

In the meantime, retail sales were largely above expectations in October at +0.4% MoM (against +0.1%e MoM) which confirms that the impact of government shutdown was limited. As a consequence, the consensus should rise its expectations of a 2% (QoQ Annualized) growth in Q4.

 

These figures show that economic situation has improved since the last FOMC meeting so that 2013 forecasts set in September should be met.