Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  News  >  Economy & Forex  >  All News

News : Economy & Forex

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 
All NewsEconomyCurrencies / ForexEconomic EventsPress releases

USA : The fiscal cliff

share with twitter share with LinkedIn share with facebook
share via e-mail
0
10/09/2012 | 01:40pm CET

Major European events this summer have demonstrated the willingness of the Old Continent to end the debt crisis. Investors appreciated the measures taken, but now they are worried about the American situation.


The lack of a majority in Congress requires compromise between Republicans and Democrats prevented a true fiscal policy. This is very problematic because many tax measures expire on 31 December 2012. These tax cuts have a cost between 1100 and 1400 billion dollars each year and the debt to GDP ratio has doubled since 2007. The first deadline would have a value of $ 550 billion, which represents 3.5% of U.S. GDP.


In addition, the U.S. debt ceiling (USD 16 934 billion) will be reached in three months and an agreement should be signed before this date otherwise a new lock as the summer 2011 will occur.


It seems unthinkable that the U.S. government allows such a deficit and let get support measures expire what would lead ultimately the U.S. economy into recession (estimated at -0.3% according to the Congressional Budget Office against a projected growth of 2.3% in 2012). This situation would be totally contradictory while the Fed policy which has launched its third quantitative easing aimed at supporting growth and lower unemployment. Meanwhile investors remain on alert.


 

US GDP vs  US federal budget deficit (Bloomberg)


 
 



Alexandre Nutte
© 4-traders.com 2012
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news "Economy & Forex"
04:54a Puerto Rico to sell off crippled power utility PREPA
04:51a BOJ keeps policy unchanged, slightly more upbeat on inflation outlook
04:51a BOJ keeps policy steady, slightly more upbeat on price outlook
04:40a ASIA MARKETS : Asian Markets Heat Up After Fresh Records On Wall Street
04:18a Bacardi to buy high-end tequila maker Patron in $5.1 billion deal
04:14a Optimism booms among Davos CEOs despite geopolitical storm clouds
04:03a U.S. business group lobbying surged as tax reform took shape
03:59a APPEA AUSTRALIAN PETROLEUM PRODUCTION & EXPLORAT : Industry welcomes commitment to upgrade Strzelecki Track
03:56a South Korea to ban cryptocurrency traders from using anonymous bank accounts
03:50a Samsung Electronics says U.S. tariffs on washers a great loss for American consumers
Latest news "Economy & Forex"
Advertisement