Is ‘Fiscal Cliff’ Already Wreaking Havoc with Economy?
New economic data isn’t pretty. And Larry Kudlow fears it’s going to get much worse.
He thinks the looming “fiscal cliff” has already started to do serious damage to the economy, and worries the damage could get much worse, with Congress ultimately driving Corporate America right to the edge.
The fiscal cliff, or confluence of tax hikes and spending cuts that could go into effect as soon as January, 2013, has generated bickering among Republicans and Democrats alike, with both sides all but refusing to address the issue until after the election.
And Larry Kudlow firmly believes months of negotiations are still needed to resolve the “fiscal cliff.” That doesn’t bode well since there are only 3 months left in the year.
If Kudlow’s interpretation of the latest durable goods numbers is on target, the uncertainty has already taken a toll.
According to the Commerce Department, new orders for durable goods or long-lasting manufactured goods fell by the most in 3-1/2 years last month. That’s the largest drop since January 2009, when the economy was in the throes of a recession.
Business is getting defensive and not buying big ticket items, says Kudlow, simply because they don’t know what to expect.
As the situation stands now, unless Congress acts $109 billion will automatically be cut from Federal spending with military programs taking a big hit.
Republicans, however, want to cancel most of the military spending cuts and mandate more reductions to domestic programs,.
On The Kudlow Report Andrew Liveris, the CEO of Dow Chemical, cited the fiscal cliff as one of his chief concerns about doing business.
"The Kudlow Report" airs weeknights at 7 p.m. ET.