CBO Explains The Damage To The US Economy If We Fly Off The Fiscal Cliff

The U.S. will fall into recession in 2013 if federal spending cuts and tax hikes are automatically put in place, the Congressional Budget Office says in a new report today.

The CBO estimates the economy could shrink as much as 0.5 percent if the fiscal cliff is hit.

Below, key highlights from the new CBO report.

Economic Outlook for Fiscal 2013 If We Go Over Fiscal Cliff:

• Unemployment will rise to 9 percent by Q4 2013
• GDP will shrink by 0.5 percent in 2013
• The deficit will shrink to $641 billion in fiscal 2013  — roughly 4.0 percent of projected GDP
• Inflation will remain low in 2013

The CBO also released its alternative scenario for Fiscal 2013 if the fiscal cliff is not hit and spending cuts are not automatically put in place:

• Unemployment will fall to 8 percent by Q4 2013
• GDP will grow by 1.7 percent in 2013
• The deficit will shrink to $1 trillion from $1.1 trillion in 2012

We'll be updating as we pore through the report.

Click here for updates >

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