The economy was growing at 2% until nervousness about the "fiscal cliff" recently dampened business spending and hiring.
Though some economists were optimistic that the housing recovery and stronger auto sales could spell better times, with such a new large drag on the economy, GDP growth in 2013 and 2014 will likely be below 2% for the next several quarters.
At that pace, businesses can easily handle most new demand by increasing productivity, and even trim payrolls to further boost profits. Hence, growth below 2% for several quarters could easily instigate a negative feedback cycle -- layoffs cut household income and consumer spending, and in turn, the latter begets more layoffs.
What is going on in Washington these final weeks before the New Year is the kind of fiscal fundamentalism that is making Greece, Italy and Spain economic train wrecks.With unemployment so high, real wages falling and so many folks working part time for lack of full-time work, the unemployment rate could easily surge into the teens, and no amount of stimulus spending could bring it back. Clearly, Messrs. Obama and Boehner know a lot about getting elected but on economics they are spread thin. Like the sorcerer's apprentice, they are courting disaster. Follow @PMorici1 This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.