We forecast weaker than expected UK retail sales data this morning, looking for a 0.3% rise on the month.

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From Shayne Heffernan

Another day of politics, tiring, boring and not entertaining, today’s politicians are devolving in to reality TV stars. It has truly become Hollywood for ugly people.

As a year-end deadline nears, Obama and House of Representatives Speaker John Boehner are locked in intense bargaining over a possible deal to avoid the so-called fiscal cliff of harsh tax hikes and automatic spending cuts that could badly damage an already weak economy.

Obama said he was puzzled over what was holding up the talks and told Boehner’s Republicans to stop worrying about scoring “a point against the president” or forcing him into concessions “just for the heck of it.”

Any fiscal cliff agreement by Obama and the Republican leadership would need the support of their parties’ rank and file in Congress, and Thursday’s vote on Plan B will be a test of Boehner’s ability to deliver votes on any eventual deal.

Boehner faces opposition from Republican Tea Party conservatives over his concession to raise tax rates. But in a sign some conservatives are coming around to Boehner’s position, anti-tax activist Grover Norquist gave his blessing to the bill.

Other conservative groups, including the influential Club for Growth, are urging Republicans to vote against Plan B.

Obama and Boehner appear to have bridged their biggest ideological differences but remain hung up on the mix of tax hikes and spending cuts meant to narrow the budget gap.

“What separates us is probably a few hundred billion dollars,” Obama said.

The White House wants taxes to rise on household incomes above $400,000 a year, a concession from Obama’s opening proposal for a $250,000 income threshold.

If a deal is not reached soon, some $600 billion in tax hikes and spending cuts are set to begin next month.

Senior administration officials described negotiations as at a standstill and Obama warned he would ask everyone involved in the talks, “what it is that’s holding it up?”

Still, the top Republican in the Senate said a resolution to the stalemate could come by the end of the week.

From Lloyds Bank

There is still a lot of economic data on the calendar ahead of the holidays. Today, we expect a disappointing UK retail sales report, a rise in US jobless claims and smaller than expected improvement in the Philadelphia Fed survey.

We forecast weaker than expected UK retail sales data this morning, looking for a 0.3% rise on the month. Last months larger-than-expected 0.8% decline in October signalled a weak start to Q4 consumer spending and November is unlikely to see any significant rebound.

The BRC reported that last months’ sales started off well, led by mid-season sales, and the timing of half-term. However, the survey suggests that the impact of these influences waned in the second half of the month, supporting our UK economists below consensus forecast.

In the US, the second revision to Q3 GDP is likely to be overlooked by the market although we expect an upward revision from 2.7% to 3.0%. Jobless claims and Philadelphia Fed are likely to hold the most market attention today. Jobless claims have fallen sharply since Hurricane Sandy, but should rise to 365k after last week’s large fall to 343k.

Later this afternoon, we forecast a small improvement in the Philly Fed from -10.6 to -6.0. The deterioration in Empire index earlier in the week was surprising, although the movement in these indicators has been divergent since July. US data releases may also be influenced by the US fiscal cliff negotiations that continue to sway sentiment.

Read the full report on Lloyds Bank website here.