The Month in Review (Nov)

• Despite bond-buying by the European Central Bank, the overseas debt debacle spread from Greece, Portugal, and Ireland to larger economies, costing the Greek and Italian prime ministers their jobs in the process. Yields on Italian and Spanish debt neared or exceeded the 7% level that triggered the need for bailouts in the smaller countries. As investors became more reluctant to lend in Europe, even France and Germany showed signs of weakness. By the end of the month, six central banks, including the Federal Reserve, adopted measures that would facilitate currency exchanges among the banks to increase liquidity in the global financial system, especially in Europe.
• The congressional supercommittee charged with finding ways to cut the national deficit by $1.2 trillion admitted it had been unable to do so. As a result, $1.2 trillion in across-the-board budget cuts, split roughly evenly between defense and other programs, are slated to be implemented in 2013. The dissent among committee members also raised questions about the potential for resolution of other issues, such as payroll tax cuts and unemployment benefits that are scheduled to expire at year’s end.
• The U.S. economy grew 2% during the third quarter, a bit slower than the Bureau of Economic Analysis had previously estimated but still ahead of Q1’s 1.3%. However, that didn’t do very much for the unemployment rate, which the Bureau of Labor Statistics said edged down to 9%–exactly where it was in January.
• Strong sales of electronics and appliances helped push retail sales up 0.5% in October, according to the Commerce Department. Also, the National Retail Federation said there were 6.6% more shoppers hitting the Black Friday weekend sales this year, and they spent an average of 9.3% more than they did last year. Clothing and electronics were some of the most popular purchases. However, durable goods orders fell 0.7%, hurt by lower demand for commercial aircraft.
• Lower energy costs helped reduce inflation at both the consumer and wholesale levels, the Bureau of Labor Statistics said. The Consumer Price Index fell 0.1%, while the wholesale index was down 0.3%. Also, the Bureau of Economic Analysis said that personal incomes and spending rose by 0.4% and 0.1% respectively, while the savings rate edged up to 3.5% of income.
• Housing starts dipped by 0.3% after strong growth the previous month, but were still 16.5% higher than the same time last year, and the Commerce Department said building permits were up 10.9%. Meanwhile, home prices as measured by the S&P/Case-Shiller national index remained lackluster during the third quarter, up a scant 0.1%. Those prices helped bring out buyers, as the Commerce Department said sales of new homes rose 1.3% from the previous month and 8.9% from last year.