Living in No Man’s Land: Beyond a Showdown over Spending & the Debt Ceiling

Diane Swonk explains why 2013 is a turning point for the economy

CHICAGO--(BUSINESS WIRE)--In the January issue of Themes on the Economy^®, Diane Swonk reflects on the Christmas truce in 1914 between opposing sides in World War I and how it “offers a provocative metaphor for today’s budget battles in Washington.” She notes that, “a holiday truce allowed our elected officials to breach the 'no man’s land' of the Beltway.” So it is possible to work together.

“cuts to state and local government budgets … are abating and removing the greatest headwind to employments gains.”

Swonk says that the U.S. economy is at a turning point, poised for the strongest growth in five years if uncertainty in Washington can be resolved. Three reasons: “Economic fundamentals are improving. Home prices are rising instead of falling; this is finally generating a more meaningful recovery in housing,” so spending related to housing, like furniture, appliances and carpets will pick up too.

She adds that “cuts to state and local government budgets … are abating and removing the greatest headwind to employments gains.” And thirdly, “corporate America is flush with cash. All that’s needed is a dose of certainty to release those funds and invest in the future.” To learn about additional factors pointing to a better economy in 2013 and 2014, watch a video or read this month’s issue of Themes on the Economy^®. Archived issues can be found at mesirowfinancial.com.

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