If you mean predictions as to “what will actually happen”, this depends heavily on the outcome of the current negotiations, and I don’t think anybody has a reliable idea at this point.
If you mean predictions as to “what would happen if absolutely no change to current law was made”, then I think the standard prediction is that there would be a negative hit to the US economy from the “austerity”, pushing it back into recession. But this would happen over a period of several months, not right away on January 1st, leaving quite a lot of time for a compromise changing the laws to be negotiated. So there is no immediate reason for alarmism. In addition, this prediction assumes no extra non-legislative policy measures, such as new monetary stimulus by the Fed, that could potentially soften the impact of the cliff.
I don’t think there are any predictions that can be identified as very reliable a priori, to be honest; economics is hard, and economics combined with politics is super hard.
If you mean predictions as to “what will actually happen”, this depends heavily on the outcome of the current negotiations, and I don’t think anybody has a reliable idea at this point.
If you mean predictions as to “what would happen if absolutely no change to current law was made”, then I think the standard prediction is that there would be a negative hit to the US economy from the “austerity”, pushing it back into recession. But this would happen over a period of several months, not right away on January 1st, leaving quite a lot of time for a compromise changing the laws to be negotiated. So there is no immediate reason for alarmism. In addition, this prediction assumes no extra non-legislative policy measures, such as new monetary stimulus by the Fed, that could potentially soften the impact of the cliff.
I don’t think there are any predictions that can be identified as very reliable a priori, to be honest; economics is hard, and economics combined with politics is super hard.
Thanks. Good to know.