Wall Street Journal (12/27/12) Damian Paletta; Janet Hook; Carol E. Lee

The U.S. Treasury Department expects the federal government to reach the national borrowing limit of $16.394 trillion on Dec. 31, which will trigger a set of emergency measures to keep the government operational for several weeks and put off a debt crisis until February or March 2013. In a two-paragraph letter to Congress, U.S. Treasury Secretary Tim Geithner did not specify when emergency measures would be exhausted, noting that “significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013.”

The White House and congressional leaders have shown no signs of progress toward crafting an agreement to avoid the year-end tax increases and spending cuts. A narrow deal to avert that outcome—a plausible result—might not include an agreement to raise the $16.394 trillion debt ceiling, as Democrats have pressed, meaning the big, unresolved questions over how the federal government should raise and spend money are likely to come to the fore as the debt deadline draws near. Geithner said it is unclear whether or not the 2012 tax-filing season will be delayed, though many political leaders are looking at blocking tax increases for most Americans and either postponing or replacing scheduled spending cuts.

Bloomberg (12/27/12) Michelle Jamrisko

As consumers in the Northeast recover from Hurricane Sandy—the worst Atlantic storm on record—many businesses are seeing a boom in orders, providing unexpected opportunities for companies assisting in the rebuilding and the employees they’ve hired to help. Sandy has probably increased the demand for construction workers by at least an additional 30,000, says Bernard Baumohl, chief global economist at Economic Outlook Group LLC. The economic boost of post-storm reconstruction probably will occur over the next year or two, and Baumohl expects “a real big, V-shaped rebound” in construction over the next six to 12 months. “We’re going to see a significant multiplier effect with all these jobs that are going to be generating income for these workers, which are then going to spend that additional income in the economy,” Baumohl says. The rebuilding effort could add 0.4 percentage points to U.S. growth in 2013, he adds.

The auto industry has gotten a boost as residents replace vehicles lost or damaged in the storm, contributing to added hiring. Cars and light trucks sold in November at a 15.5 million annual rate, the highest since February 2008 and up from 14.2 million a month earlier when Sandy kept East Coast shoppers away during auto dealers’ busiest time of the month, according to Ward’s Automotive Group. Auto and auto parts manufacturers added 9,700 jobs in November and dealers of vehicles and their parts hired 3,300 more workers last month. Meanwhile, small businesses in the affected region are hastening to hire as cleanup orders build.

Brookings Institution (12/26/12) Gary Burtless

Employment continued to improve modestly, unemployment edged down, and wage gains were approximately equal to price inflation in 2012. The health of the job market is improving at a steady but comparatively slow pace. Jobless workers have seen improvements in their chances of finding a job, but wage and benefit improvements have lagged behind gains in worker productivity. On average, total public and private payrolls increased 157,000 a month, which was fast enough to reduce the unemployment rate over the year. The labor force participation rate fell 0.4 percentage points to 63.6% in the twelve months through November 2012, the sixth consecutive year it has declined.

The continued decline of the participation rate is an indicator of a continued shortage of job vacancies. About half of the drop in the participation rate since November 2006 can be traced to the graying of the population. Adults between 25 and 44 have the highest labor force participation rates, and they are a shrinking percentage of the adult population. People older than 55 have much lower participation rates, and they represent a growing fraction of the population.