CHERRY HILL, N.J. and PORTLAND, Maine, Dec. 13, 2012 /PRNewswire/ -- The main obstacle standing in the path of faster U.S. economic growth is a strong headwind blowing in from fiscal restraint, according to a report released today by TD Economics ( www.td.com/economics), an affiliate of TD Bank, America's Most Convenient Bank ®.
"Without fiscal drag, the U.S. economy would be headed for a growth trajectory in the 3-4% range in 2013," says TD Chief Economist Craig Alexander. "The worst of the consumer deleveraging cycle and its dampening effect on economic growth appear to be over. But just as the private sector is set to provide a welcomed tailwind to the economy, it will be met with worsening cross winds from public sector restraint."
Alexander acknowledges that the result is likely to be a pace of economic growth that is little changed from the past year.TD Economics forecasts economic growth to average 1.9% in 2013 – down from an estimated 2.2% in 2012. However, by the second half of next year, clearer fiscal policy should lead to resurgence in private demand, placing the economy on a stronger footing with 3.0% growth in 2014. Still waiting for a path around the fiscal cliffWith a few weeks to go before deep spending cuts and tax hikes arrive and hamper economic growth, a deal to avoid them between the White House and Congress has yet to be reached. "The fact that businesses are pulling back on investing, despite healthy balance sheets and record low interest rates, is a sign that fiscal cliff concerns have already taken a toll on economic growth," notes Alexander. TD Economics estimates that if all tax hikes and spending cuts are allowed to take place as scheduled, it would cut 3.0 percentage points from real GDP in 2013.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV