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US Economy Could Withstand Brief Fall Off 'cliff'

Consumer confidence fell sharply this month, according to a survey by the University of Michigan, partly because of worries that taxes will rise next year.

For all their combative rhetoric, the White House and House Republicans have identified areas that could underpin a budget deal. Both sides concede, for example, that higher tax revenue and lower spending on programs like Medicare, the government health insurance program for the elderly, will be included.

Whatever the outcome, some trends could offset part of the economic damage. Ashworth notes, for instance, that the average retail price for gasoline has dropped 15 percent this fall. Lower gas prices give consumers more money to spend elsewhere.

And if the crisis is resolved, as many expect, the boost to business and consumer confidence would encourage more hiring and spending.

On Tuesday, the Business Roundtable, a group of large company CEOs, urged Congress and the White House to avoid the cliff by striking a budget deal containing about $4 billion in tax increases and spending cuts.

"We could end up with a much more robust recovery than anybody's envisioned" if a deal is reached, said David Cote, CEO of Honeywell International.

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AP Business Writer Anne D'Innocenzio in New York contributed to this report.

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Follow Christopher Rugaber on Twitter at https://Twitter.com/ChrisRugaber

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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