Monday, December 31, 2012

Damage Already Done: Signs of Negative Economic Impact Growing

Even if lawmakers manage to avoid most of the $500 billion in tax increases and spending cuts set to take effect this week, the risks to the U.S. economy have risen as consumers and investors recoil from Washington's latest budget spectacle, the good folks at WSJ report.

Consumer confidence and stock prices have sagged and could continue sliding. Households and investors could pull back more if lawmakers fail to reach any agreement, or one that leaves in place several measures that would curb economic growth in 2013.

The latest negotiations resemble the 2011 debt-ceiling fight, which showed how 11th-hour deal making can cause serious trouble. Then, despite an agreement, the economy and markets faltered as the world outside Washington focused on the implications of an ugly process….

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