Is the US too close to the fiscal cliff?
We know how much politicians across the world hate it when they have to deal in reality and not in promises. The fiscal cliff is real and maybe too real for comfort. – TradingFloor.com
By Steen Jakobsen at www.TradingFloor.com
EXCERPTS:
If the United States Congress and President Obama don’t come up with a deal before the end of 2012, the US will face a “fiscal cliff” on January 1, 2013. The fiscal cliff is the combination of tax cuts expiring, jobless benefits being lowered, higher personal income taxes, and mandatory spending cuts that will come into force automatically.
The downside risk of the fiscal cliff is a negative 3.5-4.0% GDP impact on growth in 2013. The US economy is growing at a 2.0-2.5% pace, meaning that if nothing happens the US will be in recession by 2013.
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