State Economist: Fiscal Cliff Deal Could Slow EconomyBy Daniel Cherry | Published 02 Jan 2013 06:00pm |
Forecasters could downgrade Mississippi's economic outlook following the deal to avoid the fiscal cliff...that's according to the state's economist. MPB's Daniel Cherry reports...
State economist, Darrin Webb, says it's too early to know the full impact of the 11th hour deal to keep America from going over the fiscal cliff. Webb says the deal avoids steep tax increases, but even so, taxes will rise on most Mississippians.
"They did leave in place the payroll tax, and so that does have an effect on the U.S. economy and certainly on Mississippi as well. I've seen some estimates that say that portion alone could shave about 7/10ths of a percent of growth off the 2013 economy."
Webb says the payroll tax increases, about an additional 450 dollars for households earning between 30 and 40 thousand dollars, will put a damper on consumer spending due to lower disposable income.
"Mississippi's economy is barely growing anyway. This will continue to dampen growth. Now, our projections for the 2013 economy, what it was, say a month or two ago, was probably about 1%. We're revisiting that forecast now, and we will be shaving some of that projection off as a result of this."
Still Webb thinks the deal avoids the much more serious consequences of going over the cliff. Lawmakers are expected to soon have another battle over raising the debt ceiling. Webb says that could be another blow to consumer confidence this year.
"These are the kinds of things that continue to undermine confidence. Right now we're seeing, for example, small business confidence has plummeted, and it think it has a lot to do with all the discussion of the fiscal cliff and the long-term plans...there is no long-term plans for the economy."
U.S. debt reached it's legal borrowing limit on Monday...that gives Congress about two months to raise the debt ceiling or the U.S. will default on it's bills.
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