The CBO reports gloom and doom for 2013 is the Bush tax cuts expire:
Here’s what the CBO thinks will happen if Congress allows Bush-era tax cuts to expire and automatic spending cuts go into effect:
- Fiscal tightening would lead to economic conditions that, “will probably be considered a recession.”
- A very sharp hit could be in store first half of the year, with the economy contracting 2.9%. That would mark the worst contraction since early 2009.
- The economy likely will contract 0.5% in calendar year 2013; the agency’s previous assumption was for 0.5% growth.
- Unemployment would likely rise to about 9%, up from 8% now, and stay above 8% through 2014.
- Effects could be felt for many years; the economy could continue to operate below its potential level until 2018.