CBO analysis of the “fiscal cliff” shows that the economic situation has worsened this year

[Valin]

Power Line:

 

Paul Mirengoff

8/23/12

 

The Congressional Budget Office warns that U.S. economy will fall into a recession unless Congress acts to avert a series of tax increases and budget cuts due to take effect in January. Absent such action, the “fiscal cliff” (or “Taxmageddon”) will push the unemployment rate up to 9.1 percent by the end of 2013 and produce economic conditions “that will probably be considered a recession,” says the CBO.

 

This forecast is much more gloomy than the CBO’s last estimate of the impact of the fiscal cliff. In January of this year, the CBO said that the fiscal cliff would trigger a mild recession in the first half of 2013, with the economy shrinking by 1.3 percent. Now it foresees a contraction of 2.9 percent in gross domestic product, “similar in magnitude to the recession of the early 1990s.”

(Snip)

 

The CBO explains that the revision is due, in part, to certain actions by Congress that have made the fiscal cliff even steeper, i.e., extending a temporary payroll tax break and emergency unemployment benefits. It also says, however, that the underlying economy is weaker than previously predicted.

 

(Snip)

[clearvision]

What will congress do? They hate making decisions around election time. I guess we can expect a lame duck fiasco.

[Valin]

What will congress do? They hate making decisions around election time. I guess we can expect a lame duck fiasco.

 

What will Congress do?

A. Blame the other party

B. Form a High Level Committee to investigate all the solution

C. Duck and Cover

 

In other words (as you point out)...nothing...well nothing that may actually resolve the problem.

OTOH after the election and assuming the CBO is correct (remember they can only answer the question asked, and the way it is asked) the situation may be so bad it will force them to act.

[pollyannaish]

Sigh. I love giving these folks the little money I have. I feel so safe.

[Valin]

Sigh. I love giving these folks the little money I have. I feel so safe.

 

My Acme MK VI sarcasm detector is....twitching

[pollyannaish]

Sigh. I love giving these folks the little money I have. I feel so safe.

 

My Acme MK VI sarcasm detector is....twitching

 

I figured you had one, so I didn't waste my breath on a /rant tag.

[Draggingtree]

Economic Report

Aug. 23, 2012, 9:22 a.m. EDT

U.S. weekly jobless claims rise to 372,000

 

Applications reflect little change in nation’s hiring trends

 

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — Applications for U.S. jobless benefits rose slightly last week, the government reported Thursday, but the latest figures suggest little change in the nation’s underperforming labor market.

Initial claims increased by 4,000 to a seasonally adjusted 372,000 in the week ended Aug. 18, the Labor Department said. That’s the highest level in five weeks.

Economists surveyed by MarketWatch had projected claims would rise to 369,000.

The level of claims is a rough gauge of whether layoffs are rising or falling. Applications for unemployment benefits have hovered around 370,000 for the past month, a level that indicates a modest increase in hiring at best.

Yet claims have shown virtually no improvement after falling to a four-year low in February, reflecting a slowdown read more

http://www.marketwatch.com/story/us-weekly-jobless-claims-up-slightly-to-372000-2012-08-23