Photo: Wikimedia Commons
The latest note from Citi’s Tobias Levkovich takes a close look at the Fiscal Cliff – the expiration of a slew of government tax cuts and spending programs.Should the U.S. go off the cliff, it could have an enormous impact, being twice as large as any fiscal drag since World War 2.
Interestingly, other than some millitary contractors, corporations have not reacted by changing their future plans.
From Levkovich’s note:
“…corporate leaders have not downshifted on capital investment programs thus far, further arguing that management teams also expect some cooperation as we suspect lobbying for just that is occurring behind the scenes. At the same time, CEOs understand that election politics prevent a near-term resolution…”
The view seems to be that any talk that we might actually go off the fiscal cliff is just posturing by two parties in a high stakes election. With the election resolved one way or another, that impediment to resolving the cliff will be eliminated.
That’s the implied position of corporations at the moment, and they’re voting for it with their wallets.