Are you worried yet about fiscal cliff 2013?
If not, here are millions of reasons to be concerned.
According to a report released today (Friday) from the National Association of Manufacturers, "The "fiscal cliff' is still two months off, but the scheduled blast of tax hikes and spending cuts is already reverberating through the U.S. economy, hampering growth and, according to a new study, wiping out nearly 1 million jobs this year alone."
The report, titled "Fiscal Shock: America's Economic Crisis," details how the fiscal cliff could destroy some 6 million jobs through 2014, and send unemployment skyrocketing to nearly 12%.
"The worst could be ahead," the report said. "If the fiscal contraction happens, the economy will almost certainly experience a recession in 2013 and significantly slower growth through 2014."
The Ugly Reality of Fiscal Cliff 2013
Businesses of all sizes in all sectors and all regions are bracing for fiscal cliff 2013 by laying off workers and letting vacant jobs stay unfilled. They also have suspended expansion projects and put off major purchases.
That's why the "Fiscal Shock" report predicts 3.6 million jobs could be lost in 2013.
"The recovery has weakened enough that it couldn't withstand the expiration of the Bush tax cuts. A lot of small business owners are in the top bracket, and that affects job creation," Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida told USA Today.
Data released Thursday from the Commerce Department showed orders for capital goods has slowed, underscoring just how cautious businesses have become.
"The slowdown in business fixed investment during the second half of the year is even more pronounced than feared," Harm Bandholz, an economist at UniCredit in New York told Reuters.
With this heightened caution, fiscal cliff 2013 would weaken an already fragile economy. And no amount of government stimulus (quantitative easing) would be enough to cushion the blow.
According to the report, "Even under the best-case scenario, it will take almost a decade for economic activity and employment to reach the levels they would have reached without a fiscal shock. While the spending cuts and tax increases reduce the federal deficit and debt, the substantial negative consequences of not addressing the end-of-year fiscal crisis before it happens will be devastating."
That's why economic and employment concerns are at the forefront of Election 2012.
Election Outcome Could Write Our Fiscal Cliff Fate
If GOP presidential hopeful Mitt Romney won the White House, the fiscal cliff and its disastrous economic aftermath is more likely to be avoided, according to Goldman Sachs (NYSE: GS).
In a note to clients, Goldman's political economists wrote, "A Romney win seems more likely to lead to a short-term extension of the 2001/2003 tax cuts and some aspects of the fiscal cliff. A status quo political outcome raises the risk of a game of fiscal "chicken' at year end, in which policy goes "off the cliff" unless one party reverses their long-held position on the upper income portion of the tax cut."
It is widely agreed upon on Wall Street that a Republican-controlled House is more likely to work with a Democrat-controlled Senate to at least hammer out an extension of the tax cuts and postpone the automatic spending cuts.
As fiscal cliff 2013 looms, voters have 10 days to decide who they want in charge of the U.S. economy for the next four years.
Related Articles and News:
- Money Morning:
Fiscal Cliff: How Each Candidate Plans to Save Us
- Money Morning:
Fiscal Cliff 2013: The Biggest Threat To Your Profits
- Money Morning:
Prepare for the "Alarmingly High" Threat of Recession 2013
- National Association of Manufacturers:
Fiscal Shock: America's Economic Crisis
Romney Win Would Be Better for Avoiding Fiscal Cliff
The looming fiscal cliff: why it matters
Business investment stalls as "fiscal cliff" looms