The analysts at Goldman Sachs have been among the most pessimistic people to talk about the fiscal cliff — the tax cuts and spending programs that will expire automatically at the end of the year and slash GDP by around 4 percentage points.
Goldman’s David Kostin has warned that fiscal “brinksmanship” will cause the S&P 500 to tumble to 1,250 by the end of the year.
In various surveys and anecdotes, U.S. businesses have indicated that uncertainty surrounding the fiscal cliff is preventing them from pursuing any major investments for growth.
Bottom line: the fiscal cliff is increasingly becoming a worry for the U.S. economy as the end of the year approaches.
Here’s a quarter-by-quarter breakdown of how the various components of the fiscal cliff could smash the U.S. economy from Goldman Sachs via FT Alphaville’s Cardiff Garcia: