by Matthew Rusling
WASHINGTON, Jan. 23 (Xinhua) -- The U.S. economy is looking healthier than it has for years despite dysfunction in Washington.
Consumers and businesses are willing to spend; banks are healthier; and household finances are in the best shape in five years. Companies are sitting on piles of cash; the stock market is doing well and Tuesday saw the second-highest rate of existing home sales since 2009.
This is happening despite a Congress that lurches from one crisis to another: After capping off 2012 with an eleventh-hour fiscal cliff agreement, the debt ceiling battle looms and lawmakers are expected to take the issue to the deadline's edge. While Congress voted Wednesday to suspend the borrowing limit until May, the extension offers only a brief respite.
"What we are seeing now is a recognition that this is how Washington is going to look for a while, and it should not cripple the private sector," said Bernard Baumohl, chief global economist at the Economic Outlook Group and frequent guest on PBS' Nightly Business Report.
While uncertainty in Washington continues to be an economic drag, the economy has begun to get wise to Washington's shenanigans. Barring a total government derailment, the private sector should continue to look healthy, economists said.
"Now there's a build-up of pent-up demand in the private sector and a sense among people, businesses and markets that this brinksmanship, if it follows the same course as it has in the past, will lead to a last-minute agreement," he said.
Once the debt ceiling crisis is resolved, businesses will gain a better sense of how to plan going forward, economists said.
"Businesses have put a lot of projects on the shelf, and if there's a little more clarity because we have got something done in Washington, our thinking is that some of those projects get unshelved and get released," said Wells Fargo senior economist Sam Bullard, adding that business capital expenditure should help contribute to economic growth in the second half of the year and beyond.
But it remains unknown when economic gains will translate to jobs growth, as the country stays mired in high unemployment with 12 million jobless and millions more only able to find part-time work.
HEALTHIER, BUT NOT OUT OF THE WOODS YET
"I don't think we're out of the woods yet," said Scott Nystrom, associate economist at Regional Economic Models Inc., referring to the country's flimsy jobs growth over the last few months.
Moreover, the fiscal cliff deal saw a payroll tax hike that economists said could eat away at disposable income and cut into consumer expenditures from dining out to trips to the movies, economists said.
And there remains uncertainty over President Barack Obama's health care overhaul and the financial reforms passed in his first term, with corporations piling cash and hesitant to deploy those funds, economists said.
Critics blast both bills for lack of clarity on how they will be implemented and what taxes businesses will have to pay, making it difficult for businesses to move forward.