Most economists surveyed by USA TODAY have little faith a divided Congress will adequately address looming tax increases and spending cuts, significantly hampering economic growth well into 2013.
The standoff in Washington, along with the global economic slowdown, threatens a U.S. economy that otherwise would be gaining steam on a strengthening U.S. housing market and improving private-sector balance sheets, economists say. The survey of 50 leading economists was conducted Aug. 3-8.
Fifty-three percent of those surveyed don’t think Congress will be able to lessen the impact of $560 billion in tax increases and spending cuts, slated to take effect at year’s end, in a way that avoids significant damage to the economy. The Congressional Budget Office says the so-called fiscal cliff would slice up to 4 percentage points off growth next year — causing the economy to contract in the first half — if all the deficit-slicing measures occur at once.