Fiscal Cliff Likely to Cause Recession, CBO Cautions

Yesterday, the Congressional Budget Office (CBO) released its annual August update of its Economic and Budget Outlook.  A copy of the report can be found here. The report provides different scenarios for the non-defense discretionary spending total and its annual growth rate.  One scenario projects a recession that would raise the unemployment rate to 9 percent in 2013 if Congress fails to reach an end-of-the-year deal to prevent the tax increases and across-the-board spending cuts known as sequestration  that comprise the fiscal cliff.  Another scenario assumes Congress enacts legislation to avoid the fiscal cliff by the end of this year, where the economy will continue to grow, albeit slowly with unemployment remaining largely unchanged. However, the federal deficit for 2013 would again reach over $1 trillion instead of the $641 billion estimated in the event of a fiscal cliff. Congress has tough decisions to make when it comes to our short term and long term economic health. Federal construction programs remain at risk for facing budget cuts in the coming years. AGC will continue to work with Congress to maintain federal investment in construction. For more information, please contact Sean O’Neill at (202) 547-8892 or oneills@agc.org.