This has been a topic I’ve discussed here before — the looming “fiscal cliff” facing the U.S. economy in 2013. I’ve also voiced concern that, just as happened when the Bush tax rates were in jeopardy in the past, the current business decision-making is stalling due to the worry about next year.
That’s the topic of a Washington Times news item today.
Worries about the federal government’s “fiscal cliff” are taking their toll on the economy well ahead of the year-end deadline, which analysts say is looking like it may be more damaging in the run-up than in the reality.
Businesses frequently cite uncertainty about what will happen with $600 billion in government spending cuts and expiring tax breaks scheduled to start taking effect Jan. 1 as their reason for refraining from hiring or spending on facilities and equipment. Reports make it clear that this uncertainty contributed significantly to the economic slowdown in the spring and summer as well as to a continuing slump in manufacturing.
Activity at the nation’s factories — already depressed by the recession in Europe and slowdown in China, two of the biggest U.S. export markets — went into reverse during the summer as U.S. businesses put orders on hold.
There is also growing sentiment from those who claim to be experts on such things that the U.S. is already in a recession. The fiscal cliff threat and actual impact may ensure our economy ends up in another recession.
Finally, since a strong area of interest for me is healthcare and its impact on the economy, here is another example of how Obamacare is also a drag on our economy going into 2013.
The owner of Olive Garden and Red Lobster restaurants is putting more workers on part-time status in a test aimed at limiting costs from President Obama’s health care law.
Darden Restaurants declined to give details but said the test is only in four markets across the country. The move entails boosting the number of workers on part-time status, meaning they work less than 30 hours a week.
Under the new health care law, companies with 50 or more workers could be hit with fines if they do not provide basic coverage for full-time workers and their dependents. Starting Jan. 1, 2014, those penalties and requirements could significantly boost labor costs for some companies, particularly in low-wage industries such as retail and hospitality, where most jobs don’t come with health benefits.
Unfortunately, we will see more of this as Obamacare is further implemented over the next two years.
Our nation faces some very big decisions next year, no matter who wins the White House.