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Fiscal Cliff resolution

Have we created certainty ? Not yet.

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Fiscal Cliff resolution

The Fiscal Cliff has not been completely resolved. Tax law changes were made that will have a significant near term impact on the economy but other issues remain to be resolved including the debt ceiling and changes in  spending programs. Getting the tax changes accomplished was enough to spark optimism in financial markets, and may help improve business and consumer confidence, but there will be more political debate and brinkmanship over the next two months or so that may mitigate the immediate euphoria.

In addition, the net impact of the “American Taxpayer Relief Act of 2012” as the legislation is officially known will be negative for the economy because higher taxes will hit almost every household in the US. This will result in less consumer spending as more income goes to pay taxes. This will lead to a continuation of the subpar growth that has characterized this recovery to date. If we are able to settle all the issues and at least understand the “rules of the road” it is likely that business confidence will rise leading to healthier economic growth. 

Stronger growth will enable the economy to support the Federal debt. A return to stronger growth is not likely until late 2013. For the real estate sector the final resolution of the US debt situation will have an important impact on market activity. Leasing and investment markets appear poised for healthy levels of activity this year, but how fast this occurs will depend critically on how and when all elements of the Fiscal Cliff are resolved.

Source : Cushman & Wakefield

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Keywords : Cushman & Wakefield