‘Fiscal Cliff’ May Mean Recession

Congressional Budget Office warns tax hikes, government spending cuts could cause U.S. economy to contract in 2013.

The U.S. economy will probably tip back into recession next year if Congress doesn’t address an impending “fiscal cliff,” the Congressional Budget Office said.

The nonpartisan agency said in a report today that the economy would contract at annual rate of 1.3 percent in the first half of 2013 if lawmakers allow the Bush-era tax cuts to expire as scheduled and don’t head off $1.2 trillion in government spending cuts set to begin taking effect in January.

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