The U.S. economy will probably tip back into recession next yearif Congress doesn't address an impending “fiscal cliff,” theCongressional Budget Office said.

The nonpartisan agency said in a report today that the economywould contract at annual rate of 1.3 percent in the first half of2013 if lawmakers allow the Bush-era tax cuts to expire asscheduled and don't head off $1.2 trillion in government spendingcuts set to begin taking effect in January.

The economy would resume growing in the second half of nextyear, CBO said, at an annual rate of 2.3 percent.

“Such a contraction in output in the first half of 2013 wouldprobably be judged to be a recession” according to past recessionsas identified by the National Bureau of Economic Research, CBOsaid.

“Policymakers face difficult tradeoffs in deciding how quicklyto implement policies to reduce budget deficits,” the report said.“Particularly important given the current state of the economy,immediate spending cuts or tax increases would represent an addeddrag on the weak economic expansion.”

Lawmakers in both parties have said they don't plan to allow allof the tax increases or spending cuts to take effect, although theydon't agree on how to address them.

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