"We are looking at growth of 1.7%, somewhere around there," after around 2% GDP growth in 2012, said Gregory Daco of IHS Global Insight. But that is better than what could have been if Democrats and Republicans had failed to agree on legislation to avoid the much larger programmed tax hikes of the cliff, he said. "If nothing had happened... we would have been in a recession."
WASHINGTON -- The political deal to pull the U.S. away from the "fiscal cliff" will still hit economic growth and efforts to generate jobs, economists said Wednesday, but the country will avoid a feared recession.
Although not as severe as they could have been, Congress and the White House agreed tax increases on the country's wealthiest 2% and higher paycheck deductions for all workers that will suck enough money out of the economy to significantly hold back growth in 2013, they said.
Moreover, politicians still face a battle over cutting federal spending -- put off for two months in the wrangling over the cliff deal finally passed Tuesday -- that could further crunch the economy this year.
That means more tepid expansion of gross domestic product this year, with equally slow job creation as in 2012, by most estimates.
"We are looking at growth of 1.7%, somewhere around there," after around 2% GDP growth in 2012, said Gregory Daco of IHS Global Insight.
But that is better than what could have been if Democrats and Republicans had failed to agree on legislation to avoid the much larger programmed tax hikes of the cliff, he said.
"If nothing had happened... we would have been in a recession."
