Flight 2013: taking-off the fiscal cliff?

New Year eve parties may have been planned with much fest and fervor all over the US, but the ambience in the Congress is all strained up. The culprit? You guessed it; it’s the fiscal cliff.
Meeting up the fears of many US and global economists, talks on the fiscal cliff debate have not reached a resolution and only a few hours more are left to go before the countdown to 2013. So unless the House and the Senate come to a mutual decision, Bush era tax cuts and spending increases will expire, triggering an increase in taxes and automatic spending cuts that will have far-reaching consequences for the US and global economy.
A 0.5 percent in the growth rate and increase in unemployment to over nine percent is what the US economy could be bracing itself for. Average Americans should best be prepared for uncertainty about tax cuts in the upcoming pay check, ups or downs in the stocks they’ve invested in, loss of unemployment benefits, or even a possible layoff in case of federal workers.
When the world’s largest economy is at the brink of a cliff, how can one expect the global markets to remain calm, and gold and oil are two commodities that take the fiscal cliff issue quite seriously.
That 2013 could mean a southward turn for US GDP growth rates is something the crude oil market has not ignored, being under pressure as an impasse on talks between the Republicans and Democrats seems like the more probable option on the first day of the coming year.
Gold, meanwhile, seems to be making the most of the uncertainty, having become great friends with any uncertainty doing the rounds on the global economy arena.
Besides, prices of food commodities will also go down, putting exporters and exporting countries of these commodities at a disadvantage because the US is also the largest importer of many commodities.
Other countries will also stand to lose from any impasse. “China and several advanced countries would also suffer up to one quarter of the hit taken by US growth,” the BBC quoted an IMF prediction.
All in all, how the Congress would conclude the end of 2012 remains a special highlight throughout the world. When the US gets a flu, the world sneezes; and when the US falls off a cliff, fractures and broken bones will be plenty across the globe.