Some data points today show no sign of a fiscal cliff cloud dampening economic activity. November new home sales were up 4.4 percent month-on-month and 15.3 percent year-on-year in November. Importantly, sale prices were also up indicating that building some new houses could be a godo line of work to get into.
Even better, as seen above initial Unemployment Insurance claims have recovered from their Sandy spike and resumed their downward trajectory. It's clear that the long weak period in the labor market has left us with a significant long-term unemployment problem that urgently needs some creative solutions. In the absence of such solutions, we're going to be left with a semi-permanent reduction in output and increase in human misery as the long-term unemployed turn into the unemployable. But for people who aren't in the long-term unemployment trap the labor market looks quite a bit better today than it did twelve months ago and that's reflected in the steady new claims declines.