Overall Economic Look
The US economy is currently experiencing an expansion since the recession in 2009, but there are speculations from economists who are worried that this expansion will soon be ending. We can expect an economic slowdown in 2013, but it is not yet known how drastic it will be. These economists are predicting a recession starting in 2013 and the “fiscal cliff” will be a determination of where our economy is headed. Below is a chart of the important forecasted indices for both 2012 and 2013.
The Fiscal Cliff of 2013
What economists are calling the Fiscal cliff of 2013 is the combination of upcoming deadlines to major tax cuts and budget cuts. These fiscal stimulus measures -- including the Bush-era tax cuts, the 2010-2011 payroll tax cut and extended unemployment insurance benefits -- will expire at the beginning of 2013 unless Washington renews them. Congress created the conjoined deadlines on tax and spending policy as a way to prod itself to resolve long-running disputes on fiscal issues. Negotiations have stalled over President Obama's demand for higher tax rates for top earners and congressional Republicans' insistence on structural changes to entitlement spending. Congress and President Obama must reach an agreement by the year end to resolve these issues and speculations. But whatever ultimately happens, the uncertainty leading up to the resolution will likely keep investors and businesses on edge for the remainder of 2012, as they were during the debt ceiling debacle in mid-2011. Despite the speculations and fear of a recession, this fiscal cliff can be better phrased as a fiscal slope because this change will gradually happen over the year not just all at once. Major Risk Factors
The major risk factors going forward that will determine the path of the economy will mainly be based upon the decisions of President...
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