Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
August 28, 2014

The Economy is Set to Disappoint in 2013

Tim Duy weighs in on yesterday’s weak manufacturing data.

“The fiscal drama playing out in Washington is clearly impacting decision makers… We are talking about the degree of austerity.  In other words, fiscal policy will continue to be a drag into 2013… The manufacturing slowdown is real, and is being compounded by fiscal policy concerns, both real and imagined.”

“This, of course, should be no surprise.  When at the zero bound, austerity is always and everywhere an economic drag.  However, it would be unusual for the US economy to slip into a recession in the midst of a housing recovery.  I think the path to recession in 2013 is through the unlikely event that the worst fiscal cliff nightmares are indeed realized.”

  • Chredon

    I think Duy is wrong. Sure, people aren’t buying big-ticket items right now. They’re going to wait to see what’s going to happen with their tax rates. If there was a chance that my taxes were going to go up $2000 starting in January, I wouldn’t be buying anything on credit, either. But once that is out of the way and people know their financial position for the foreseeable future, they’ll start to spend again. I’m expecting 2013 to be a year of steady, if not stellar, economic growth.

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