Weekly Economic Update

Changes in the ACA: On Monday, President Obama announced that he will be making changes to the ACA. Initially, the Affordable Care Act required businesses with 50 or more workers to offer health insurance to their workers or pay a penalty. Under the new Treasury rule, firms with 50 to 99 full-time workers are free from the mandate until 2016. And firms with 100 or more workers now also only need cover 70% of full-time workers in 2015 and 95% in 2016 and after, not the 100% specified in the law. Also healthcare.gov is down, again. Debt Limit: The House on Tuesday approved a bill to extend the federal government's borrowing authority with no strings attached, after Republican leaders dropped all policy demand. This measure will suspend the debt limit and allow the government to borrow until March 16, 2015.

Yellens Testimony Before Congress: Also on Tuesday, Ms. Yellen confirmed that if the economy continues to improve as expected, the Fed will keep reducing the pace of its bond purchases in measured steps. She also commented on the unemployment rate saying that she was surprised with the current reports but thinks that the drop in labor-force participation is more structural than cyclical.

Jobless Claims: Adjusted initial claims reported this week was 339,000, an increase of 8,000 from the previous week. The 4-week moving average was 336,750, an increase of 3,500 from the previous week.

Retail Sales: Retail sales in January fell 0.4 percent, following a decrease of 0.1 percent in December. Auto sales pulled down the total with a 2.1% decline while strength was seen in electronics and appliance sales. Fourth quarter GDP will be out on February 28th and may be revised down.

Industrial Production: Industrial production decreased 0.3 percent in January after having risen 0.3 percent in December. In January, manufacturing output fell 0.8 percent, partly because of the severe weather. Additionally, manufacturing production is now reported to have been lower in the fourth quarter; the index is now estimated to have advanced at an annual rate of 4.6 percent in the fourth quarter rather than 6.2 percent.

News from around the globe: Chinese bank lending posted a higher-than-expected jump in January. Beijing has been trying to strike a balance between credit expansion, which poses increasing financial risks, with supporting economic growth. Analysts predicted that monetary policy for 2014 may be tighter than a year earlier as the country tries to decrease the expansion of its shadow banking sector, which they say poses increasing risks as economic growth slows. Brazilian data released Friday suggest economic growth has weakened over the past two quarters. The ongoing situation in Argentina may have a substantial impact on Brazilian industry, as over three-quarters of Brazilian exports to Argentina are manufactured goods. The unemployment rates for Brazil remain at record lows and wages are growing but high inflation continues to squeeze Brazilian consumers.