If You Think Things Are Bad Now...
It's actually worse than you think.
According to the Financial Times, a new report from the nonpartisan Congressional Budget Office says that its original calculations of the impact of the fiscal cliff significantly understated the risks and the situation is far worse than it thought:
The US will be plunged into recession next year if Congress fails to strike a deal to avert the looming “fiscal cliff”, with the economy contracting at a rate of 0.5 per cent in 2013, according to congressional analysts.
The projection by the Congressional Budget Office is substantially bleaker than its projection at the end of May, in which it forecast that the US economy could suffer a recession early next year but would rebound strongly enough in the second half to ensure tepid growth of 0.5 per cent for the full calendar year.The U.S. economy will tumble over the fiscal cliff—a catastrophic, simultaneous combination of expiring tax cuts and automatic spending cuts—on January 1 unless a bipartisan deal is reached.