| CBO Warns Of Bleak Economic Growth If Economy Goes Off The Fiscal Cliff |
| Aug-22-2012 |
| Keywords: cbo, fiscal cliff, gdp, unemployment, bleak |
The Congressional Budget Office today confirmed what many had suspected; the U.S. economy will probably fall into a recession in 2013 if the "fiscal cliff" occurs on schedule at the end of this year.
The CBO saying that should our economy endure the massive tax hikes expected to go into effect Jan 1, 2003, GDP will contract by 0.5% and unemployment will likely spike to 9%.
In what amounted to bleak update to its previous report, the CBO said it estimates that if the Bush tax cuts expire at the end of the year, in combination with new required spending cuts under last year's debt ceiling deal, the deficit will shrink by about $500 billion in fiscal 2013, equal to about 3% of GDP.
The deficit itself would fall from about $1.1 trillion this year to about $640 billion in 2013 because of the higher tax revenues and lower spending.
The CBO said the tax hikes would cut projected job growth by more than a million jobs or so next year.
The new outlook is harsher than one released by the CBO in May. In that forecast, the agency projected a less severe recession in the first half of the year.
But in the updated outlook, CBO says the recession would be deeper -- nearly a 3% decline in GDP in the first half of 2013 -- before economic growth rebounds in the second half of 2013, and would eventually expand by 4.3% in 2014-2017.
One component of the bleaker forecast is that payroll tax cuts will now expire at year-end. Also, previous forecasts assumed Congress would act this summer on avoiding the cliff, which has so far not happened. |
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Posted by Lou Dobbs Staff at 8:00 PM Email to a friend |
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