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Fiscal cliff negotiations continue to worry markets, but end of the year holiday sales are bringing some cheer to the economy. - 

Congress is in recess for the Christmas holiday, but fiscal cliff negotiations continue to worry markets. Trading is open for a partial day on Christmas Eve, and all the back and forth in Washington over the fiscal cliff deal has traders feeling unsettled.
"The markets don't like it," says Gus Faucher, senior economist at the PNC Financial Services Group, "We saw stock prices fall by more than one percent on Friday after Republicans weren't able to pass their Plan B."

But if there is one semi-bright spot as the year comes to a close, it might be the retail sector -- which saw a three-percent increase in sales over last year despite a slow start after Hurricane Sandy.

"It hasn't been a great season, but it's been a decent season," says Faucher, who notes that inflation-adjusted sales are still likely to come in below pre-recession levels.

Follow Mark Garrison at @GarrisonMark