If you were too busy to watch the stock market each day during the last week, you are fortunate.
The week ended on an up note, but you might not have expected such a conclusion if you'd been focused on the politically induced spasms throughout the week. As the Dec. 31 deadline approaches for action to stop $600 billion in automatic tax increases and government spending cuts, it was a week of meetings between the president and his staff and congressional leaders. And with every announcement of a meeting, and statements to the press after those meetings, the markets churned.
When Democrats and Republicans sounded like they might be conciliatory so the nation could put together a plan that would avoid the sudden shock of going over the "fiscal cliff," stocks climbed. But with the political posturing that took place in front of TV cameras after meetings, stocks sold off.
This is the way it probably will be for the stock market up to Congress' Christmas recess. Bloomberg News reported late Friday that President Barack Obama warned of "prolonged negotiations" rather than a quick compromise on tax increases and spending cuts. And House Speaker John Boehner told reporters "right now we're almost nowhere on talks."
Still, investors seem to think there will be some agreement that will keep the nation from going into a recession next year. Although the stock market fell about 5 percent because of fiscal cliff worries after the Nov. 6 election, the Dow Jones industrial average has been gaining the last two weeks and is down only about 1.6 percent now. It's up 6.6 percent for the year. The Standard & Poor's 500 is up 12.6 percent.
Economic news has taken a back seat to speculation over the cliff; in part, because it's been difficult to separate the trends in the economy's underlying strength from the impact of superstorm Sandy.
Consumer spending dropped in October for the first time in five months and fell below analyst expectations. The Commerce Department attributed a slide in income to wage interruptions related to the storm.
Still, analysts have been concerned that capital spending — or businesses buying equipment — has declined. That can be an early sign of an impending recession. Macroeconomic Advisers lowered its forecast of GDP growth in the fourth quarter to 1.1 percent.
Analysts say consumers in the Northeast might spend less on apparel and other discretionary items in the near future as they channel spending toward rebuilding after Sandy. But there will be gains in necessities. Economists such as Jared Franz, of T. Rowe Price, said he is "penciling in a payback on both income and spending" as money is spent on rebuilding after the storm.
He expects a 4.9 percent increase in vehicle sales as people replace flooded cars.
Next week, attention will focus on employment data, culminating with the nation's unemployment report Friday. Still, unless there is a dramatic change, even jobs numbers might be upstaged by the drama on Capitol Hill as investors wonder if politicians will get their act together before year-end and avoid forcing the nation off the fiscal cliff and into a recession.