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| Defend the Dream (Photo credit: InSapphoWeTrust) |
The Congressional Budget Office said Wednesday that the U.S. economy could slip back into recession if Congress fails to act before a total $8 trillion worth of tax increases and spending cuts are due to take effect in January — the so-called fiscal cliff. The same day the Fed signaled it was prepared to act fairly soon if growth doesn't pick up substantially and on a sustainable basis.
[Related: Fiscal Cliff: "Major Market Meltdown" Expected If Congress Does Nothing, Says Steven Rattner]
The aforementioned are two very big ifs, but Mark Zandi, chief economist at Moody's Analytics, has a rather optimistic outlook.
"It feels like political stars are now aligning so that regardless of who wins the next election, under almost any scenario they will get it together," he tells The Daily Ticker's Aaron Task. "Odds are good they will come up with a plan that addresses the fiscal cliff, the Treasury debt ceiling — which expires early next year — and fiscal sustainability."
Zandi attributes his rosy sentiment to deleveraging throughout the economy.
"The banking system is on much more solid ground, households have done a very good job of reducing their debt and most importantly American businesses are in very good financial shape," he says. "They've reduced their debt, got their balance sheets in order and are very profitable." ... Continue to read.
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