Wall Street shrugs at sequester's economic effect
(CBS News) For its part, Wall Street has been taking Washington's battle over the automatic, across-the-board spending cuts known as the sequester in stride. Despite talk of the different ways the spending cuts would negatively affect the economy, the markets haven't flinched.
The Dow Jones Industrial Average has increased 7.5 percent since the deal to avert the so-called "fiscal cliff" at the beginning of the year. On Friday, it closed the week just 75 points below its record high from October 2007.
Jim Awad, chairman of Plimsoll Mark Capital, a wealth advisory firm, told "CBS Evening News" Saturday anchor Jim Axelrod that the deficit-slashing sequester took effect at a time when the economy's growing, which is good for stocks.
Special Section: The Sequester
"The economy is accelerating, not dramatically but consistently," said Awad. "All of the data coming out is somewhat better than expected, whether you're talking about consumer confidence, housing starts, corporate profits, and so the economy appears strong enough to take this hit from government spending and continue to grow."
Awad agreed that the tide may turn should the sequester's effects on air-traffic controllers and food inspectors generate enough public anger to subsequently affect consumer confidence and business confidence.
"But you get the feeling from the last meeting at the White House, between White House and Congress, that both sides want to dial it down now so they can deal with other issues, such as immigration and gun control," said Awad, "and the economy seems able to take care of itself for the time being."
With this week's reports of increases in consumer confidence and new housing sales, Awad said the economy is performing better than expected.
"We had the payroll tax increase, we have gasoline prices going up; one could have made the case at the beginning of the year that the economy would slow," said Awad, "and instead it appears to be accelerating, so the inevitable growth of the American economy seems to be reasserting itself. We're just really, when you think about it, in the long run, an amazing growth machine, the American economy."
