Phew! Another 'sky is falling' economic moment averted

Remember how December was supposed to have been a disaster for the economy because everyone was so uptight about the fiscal cliff? Shoppers wouldn't buy, business owners wouldn't hire, investors wouldn't trade - a total mess. But it turned out to be a total miscalculation, with retail sales, payroll jobs, and the housing market all faring pretty well in December. Now maybe the economy would have done even better were it not for the antics in Washington, though there's scant evidence that the budget deadlock had any sort of effect. The economy kept moving at a moderate pace, consistent with the latter half of 2012, while inflation in the L.A. area actually fell 0.3 percent from a month earlier. Over the last year, consumer prices rose only 1.9 percent. From Real Time Economics:

What both 2011 and 2012 seem to indicate, however, is that the fights themselves -- as opposed to the policies that eventually emerge from them -have a limited affect on economic activity, at least in the short term. Consumers get worried, markets get jittery, business leaders raise alarms, but actual decisions on spending, hiring and investing keep relatively steady. That lesson will get another test over the next month or so, as Congress argues over whether to raise the nation's debt ceiling. If the recent precedents hold, expect plenty of hand-wringing over what the battle means for the economy, but relatively little damage in the real world. Unless, of course, the U.S. actually defaults on its debts.