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American Enterprise Institute Senior Fellow Kevin Hassett on the potential fiscal cliff’s impact on the market and economy.
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-- 'cause I another bright but Sanders talking about silver bullet you know some of the economic data -- -- was decent today jobless claims in particular falling to a level of 350000.
Last week that's nearly a five year -- our company's picking up the pace of hiring or is it -- the holiday let.
Debt is now haven't happened -- -- senior fellow and former senior economist at the Fed's board of governors Kevin great see you again.
What do you make -- the initial jobless claims training at -- -- -- look here.
Yet there are very very strong today and they continued the trend of the last month you know initial claims are down about a 100000 from the beginning of November.
And they're basically the only sign of a Pope right now on the economy if you look at the other -- the output data the investment data it's not so good.
You know markets are selling off as we head into the -- but hiring is happening at something of -- puzzle but definitely the labor market is a lot stronger than we expected.
Is the momentum poised to continue we'll get the December payrolls report next Friday I think the consensus is for about a 150000.
Payrolls added.
-- forecasting.
Yeah that's right if you take these claims data and then they pretty much tell you pretty pretty much what the payroll data is going to be in the -- -- data are gonna be around a 150 that's a very solid month.
I think ultimately it is gonna depend on the fiscal cliff if we go off the cliff and we stay off the cliff when we plummet down.
Then we're gonna definitely have a recession in the next six to nine months but if they say they're going off a cliff now but they're gonna fix -- early next year than may be markets give Washington a month or two to get -- order their house in order.
It if that happens -- I guess -- -- gonna tread water for awhile but we're not gonna see a real problem I don't think there really is a cliff on January 1 you know bid bid weakened.
Not change withholding.
They can keep government spending going and about the rate that it's going -- so even though they don't fix it which is probably the way it looks right now it doesn't mean that we're gonna tank right away in January provided that markets can believe that eventually Washington's gonna get it done.
But if you look at the message in the markets today flight to quality -- in reporting steep sell -- stocks piling into treasuries -- up -- backing off.
You have to wonder.
What's -- you know what's around the corner I mean -- can -- be bullish at all at this point.
Why I think he can be bullish and indeed very bullish we look at the labor market data today.
Provided that they get this thing fixed you know we've got debt and the -- -- not on drugs and -- -- -- senator -- himself present -- I think -- head toward the -- I think we're poised to go over it.
Right -- don't forget though that didn't the Democrats have a tactic of going off the cliff they believe that if we go over the cliff.
But then we fix it next year than Republicans will be able to vote for tax cuts for the middle class that -- -- tax cuts for the rich and they won't be technically breaking their pledge not to.
These tax has his act is already higher for a second because I'm really curious your take your -- because as you -- the third quarter was revised upwards.
-- over 3% growth pretty good -- you mentioned jobs we're seeing some momentum improvement in labor situation housing is also looking better.
Spending a little questionable but it's almost like the economy the domestic economies like at a powder -- just ready to explode and you know it's it to the good side meaning you know growth I think not -- -- -- -- but any.
Take a -- if you can out of the picture how cure for real.
You know how -- the fundamentals of the economy.
And can you even got -- it without all this other stuff going on in Washington.
Right what well I I think the way to think about it is that the economy in the fourth quarter is probably growing one and a half to 2% somewhere in there everybody's numbers around there.
That's disappointing the average in the post war period is closer to three.
And so we can do a lot better I think one of the reasons we're not doing better is that there's so much uncertainty about what government's gonna do.
And so -- -- I do believe that that we could have a great year.
Next year provided that Washington just gets out of the way and and so it's kind of -- right would -- these guys in Washington are acting like kindergartners but if they can get their act together than everything else is poised to -- -- he -- hope they can put politics aside and really just evaluate what's in the best interests of the nation.
And our job situation and I thank you so much Kevin yeah that's that that -- sometimes -- -- so is optimistic thanks again.
