The data released by the Bureau of Labor Statistics last Friday show that in November the economy added 120,000 jobs and the unemployment rate fell to 8.6 percent from 9 percent. This is yet another sign that the U.S. economy is continuing to expand. AIER’s analysis of business-cycle conditions has been forecasting this for the past few months. Contrary to claims by other commentators, our analysis did not show any evidence of a double-dip recession. The data are proving us right.

The U.S. Bureau of Economic Analysis (BEA) released its first estimate of third-quarter GDP growth. The economy expanded at an annualized rate of 2.5 percent. Certainly, considerable headwinds remain, but the recovery is intact.

It pays to keep a clear head and stick to the actual data. For several months now, while panic has reigned in the streets and markets, we have been saying that the U.S. economy is sound and that there was little chance of a recession any time soon. Our proprietary business-cycle indicators have consistently painted a picture of slow but continuing growth.

Governments don't have to default, they can inflate.

We have the most interesting impromptu conversations in the hallways of AIER. I bumped into David Michaels, our chief financial officer, earlier this week. Not too surprising, he looks at Standard and Poor's downgrade of the U.S. debt like the finance guy he is. He asked, "With corporate debt, the rating is about risk of default. How can a country like the U.S. default when it can print all the money it needs? Unlike a corporation, the U.S. simply cannot run out of money. But printing the money could cause inflation."

The U.S. House voted 269-161 to pass a $2.4 trillion debt ceiling increase yesterday, and the Senate is almost certain to follow today. The deficit deal proposed by President Barack Obama and congressional leaders will avoid default by the federal government. Early yesterday, U.S. and foreign stock markets rallied in celebration. Quickly, though, reality set in, and the markets posted losses. It remains an open question whether the deal is enough to avoid a downgrade of the nation’s debt rating from AAA to AA by Standard and Poor’s, Moody’s, and others.