While concerns are mounting around the fiscal cliff, it is important to contrast the 2011 economic environment resulting from the debt ceiling drama and the current state of affairs. When the full impact of the debt ceiling’s contentious negotiations hit in 2011, the economic environment was very different from today in two important areas. One, the global economy was still feeling the effects of the global supply chain disruption after the Japan tsunami in early 2011. Second, housing was still a drag on economic growth. In contrast, while hurricane Sandy was a significant weather event, it has not had anywhere near the impact on the global supply chain that the tsunami did. Further, today housing is adding to or at least not subtracting from GDP growth like it was in the summer of 2011. These are two very important considerations to understand, as we anticipate volatility picking up as we move towards year-end.

Comments provided by guest writer Steve Donahoe, CLS Senior Portfolio Manager

1853-CLS-11/14/2012