Batten Down the Hatches

Fiscal Cliff 2013


Worried congressional gridlock will prevent the compromise necessary to avoid billions of dollars in automatic tax increases and budget cuts, U.S. companies are delaying hiring out of fear of the economy will fall off the "fiscal cliff" in 2013. According to Bloomberg:

Faced with a so-called fiscal cliff of more than $600 billion in higher taxes and reductions in defense and other government programs in 2013, U.S. companies are pulling back, though the deadline for congressional action is more than six months away. …

Economists are predicting this trend will pick up through the year. "A lot of people see the fiscal cliff as a 2013 story, but you don’t board up the windows when the hurricane is there, you board up the windows in anticipation," said Michael Hanson, senior U.S. economist at Bank of America Corp. in New York. …

Things would get worse next year if Congress allows all of the scheduled spending reductions and tax increases to take effect. In that case, a recession is likely, the non-partisan Congressional Budget Office warned in a report last month.