By Ricardo Lopez
November 28, 2012, 2:04 p.m.
The threat of the looming “fiscal cliff” is expected to temper economic growth in the U.S., according to a report released by Chapman University economists Wednesday.
In its quarterly forecast, Chapman economists set out a moderate view of the full impact of the fiscal cliff — the year-end tax increases and spending cuts that are set to take place if Congress doesn’t act.
In their scenario, the forecast predicted planned payroll tax hikes will proceed as planned, capital gains and estate taxes will rise, but cutbacks in government spending won’t be as drastic.
Even so, “we still see reduced government spending and higher taxes cutting spending by at least $200 billion,” the report said. “Such a reduction in the deficit will surely have long-term benefits. But the effects will be negative in the short run.”
Quiz: How much do you know about the ‘fiscal cliff’?
The short-term effects will mean meager growth for the country’s gross domestic product. The forecast predicts real GDP growth in 2013 to amount to 2.1% — about the same as 2012.
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