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Why 'fiscal cliff' may be bigger threat than europe by 123wert sdfsf
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Why 'fiscal cliff' may be bigger threat than europe |
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Business,Business News,Business Opportunities
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The picture is decidedly unpretty, with the Harris analysis ampingup on earlier economist projections over how much damage the fiscalcliff triggers would impose on an already languishing U.S. economy . Whereas the consensus has been for a drag of about $500 billion or3.8 percent of gross domestic product , Harris said the actual total is closer to $720 billion, or 4.6percent of GDP. The areas of the economy likely to suffer the most damage are themost vulnerable capital spending, home and auto sales and employment , which has slowed considerably over the past three months afterstrong wintertime gains. "The cliff is likely to hurt growth this year as much as nextyear," Harris said.
"By risking a recession-sized fiscalcontraction and then offering no guidance to how it will beresolved, politicians are creating a major uncertainty shock." In remarks to a Senate panel Thursday, Bernanke was sure to mentionthe dangers of inaction by Washington both on the fiscal cliff andpolicy in general, which he said risked both neglecting deficitreduction as well as promoting growth. "Uncertainty about the resolution of these fiscal issues coulditself undermine business and household confidence.," the centralbank chair said. "Fortunately, avoiding the fiscal cliff andachieving long-term fiscal sustainability are fully compatible andmutually reinforcing objectives." Ratings service Fitch also jumped in, repeating its warning that itwould cut the U.S. debt rating if Congress doesn't resolve itsvarious budgetary problems.
Fitch analyst Ed Parker said the U.S.is the only one of four AAA-rated countries that "does not have acredible fiscal consolidation plan." Yet investment pros have talked little about the danger the fiscalcliff poses to the stock market , with most research focusing on the economic reports of the day,bond and commodity prices and, of course, the damage that abreakdown of the euro zone will bring to the global economy. "The market is reacting to whatever the market presents itself withon any given day," said Quincy Krosby, chief market strategist atPrudential Annuities in Newark, N.J. "Bernanke cares (about thecliff), serious economists care, but they are not the ones who rulethe market." Those who do care about the predicament in Washington seemunwilling to confront a future where Congress, which remainsdivided on party lines, seems unwilling to agree on even thesmallest measures, much less on charting the fiscal future of aslow-growth economy. Politically, the stakes couldn't be higher.
President Obama and his Republican challenger, former Massachusetts Gov. Mitt Romney , are battling over who has the better economic vision. Obama, though, is faced with an economy growing at only 1.9 percentand the reality that there are just 100,000 more Americans workingthan when he took office in January 2009, while there are nearly700,000 more counted as unemployed. (The statistical discrepancycomes from the surge in those who have left the labor force as wellas population changes.). I am an expert from Food & Beverage, usually analyzes all kind of industries situation, such as hearts arrows diamonds , soy meal replacement.
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