Creighton economist expects recession in 2013 without action on the fiscal cliff

Nov 28, 2012

A Creighton University economist expects an economic slowdown in 2013 if lawmakers fail to act to prevent the so-called “fiscal cliff.”

On January 1, 10 percent across-the-board spending cuts take effect. At the same time, there’ll be a combination of tax increases and the expiration of two tax cuts. A report from the Congressional Budget Office says if those happen, it’ll send the U.S. economy off a “fiscal cliff” and in to a recession.

Creighton University economist Ernie Goss agrees with that assessment. “That’s what Congress is facing, that’s what the administration is facing. Of course, it’s a standoff between the Obama administration and the House, so we’ll have to see what they come up with.”

Goss believes Congress will reach an agreement to prevent the fiscal cliff, but he says it’ll likely be a last-minute deal. If a deal isn’t reached, Goss expects there will be job losses in 2013.

The CBO report says the U.S. unemployment rate could rise to 9.1 percent by the end of 2013 without action by Congress.