Investors are approaching the final week of the year cautiously optimistic about U.S. growth prospects in 2014 despite U.S. stocks at near record highs, the 10 yr. Treasury pushing over 3 percent, and more fiscal policy challenges expected to emerge in early 2014 around raising the U.S. debt limit.
In 2013 the Dow has reached its largest annual gain since 1996 while the S&P 500 is up over 30 percent year to date and remains on target to have its strongest year since 1997, fueled by accommodative central banks across the globe, improving U.S. housing market data, and decent corporate earnings.
Last week all three indexes climbed more than 1 percent with trading volume below average due to the shortened holiday season.
December is one of the best historical months of the year for stocks.
U.S. indexes have already moved higher by 2 percent in December 2013 during the so-called “Santa Claus rally” that has spread good tidings of joy to investors.
On Saturday emergency unemployment benefits for 1.3 million Americans expired, leaving more Americans families under increased financial hardship.
Approximately 3.6 million Americans who have been unemployed for more than 26 weeks would lose their benefits by the end of 2014 if the federal program expires.
Initiated in 2008 by President George Bush and extended 11 times since then, the emergency unemployment compensation program extends unemployment benefits beyond the 26 week period that U.S. states grant and provides 47 weeks of supplemental unemployment insurance payments to help unemployed Americans searching for employment.
The federal emergency program was not funded beyond last Saturday and was not included in the 2-year bipartisan budget bill that sailed through Capitol Hill which alleviates federal sequester cuts.
Republicans are concerned that the federal unemployment extension program has already cost $252 billion since 2008.
Democrats in the Senate are pushing to have the federal program extended for 3 months until a more comprehensive program could be approved.
House Speaker John Boehner (R-Ohio) said that he is willing to work towards extending unemployment benefits if cuts were made elsewhere and job growth is guaranteed.
The cost of a 3 month extension is $6.5 billion but jumps up to $25 billion for the full year of 2014.
Senator Dean Heller, (R-Nevada) and Senator Jack Reed, (D-Rhode Island) have introduced the 3 month short- term bipartisan bill to extend the federal unemployment program.
Congress is in recess until next Monday January 6th when lawmakers are expected to decide about extending the federal program.