In its last forecast before the November elections, the nonpartisan Congressional Budget Office (CBO) predicted that the U.S. economy would experience a recession in 2013 if Congress decides to go off “the fiscal cliff” and allows scheduled tax increases and spending cuts to take effect in January.
The U.S. government will run a budget deficit of $1.1 trillion in fiscal 2012, or 7.3 percent of gross domestic product, slightly lower than the agency’s March estimate of $1.2 trillion.
The CBO predicts that the U.S. economy will grow at a 2.1 percent clip in 2012, but fall by 0.5 percent between the fourth quarter of 2012 and the fourth quarter of 2013 if Congress goes off the fiscal cliff. Under that scenario, the United States would experience a recession, with U.S. unemployment jumping to about 9 percent in the second half of 2013 from its current 8.3 percent, the CBO said.
