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Fiscal Cliff on Hold for the Holidays?

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    Wells Fargo Senior Economist Mark Vitner on the impact of the negotiations.

  • Duration 3:23
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Try to get these numbers is a lot of passes pessimism coming out on the economy be serious Fox News -- Shows forty -- percent of people think the United States economy be better.

A year from now.

Stuff from 53%.

Said so in 2011.

Mark -- senior economist -- -- -- with us now from my Charlotte always good to see mark you think this is people don't really know what's gonna happen but this the way they feel how much does that matter.

Well -- it matters.

When would we when we see big changes in its signals that there's a pullback in attitudes and and if folks are little more worried about the economy they're less likely and commit to to major purchases cars or homes are are really anything that needs to be financed.

And right now I think it's I think it's really.

Situation where we're gonna get past Christmas and then that's when I think folks are really going to focus from a fiscal -- Brand it if we don't get if we don't get a resolution I think you can really cut in the spending in the early part of next.

-- -- the thing that makes this fiscal -- talk and countdown and everything just so.

Painful and one of the it -- and speaker Boehner is press conference yesterday is that they do this every time in Washington.

It gets to people after -- -- regular people that just hear about it and they just say point distant.

It even if they if it doesn't affect them that much even if they're not the people whose taxes and the going up -- to start to think how can it can get big government can't do anything right so.

Say they did say they cut a deal we get into the new year elections behind us they come up with some sort of fiscal cliff.

Solution if you can call that was the economy look like then.

Was arrested -- look like well I.

I think that regardless of the solution even if it's a less than optimal solution I think that the economy's going to pick up just.

Just because we're gonna have some relief that it's behind us a company was sort of like if you're if you're driving through -- speed trap of some of the say watch out.

Does that -- the speed trap.

They don't table -- speed evidence you're gonna slow down roots of some ridiculous.

Low speed when you go through that town.

But once you know what the rules of the road or.

Even if taxes go up right what you know with the rules of the road are we come back through you're gonna go that fast because what's good about it tell -- one of the things that we're doing right because we will be living and higher tax environment government spending looks like it'll become a little -- won't grow as much what are we doing right right now.

Well below the one area that is really picking up its homebuilding and in homebuilding is when you better.

It's almost certainly do better next you're no matter what happens in the economy because the inventory of new homes is -- at a fifteen year low we've got less competition from foreclosures.

So even if overall sales just just told you that new home constructions going to pick up.

But but I'm I'm trying to balance that optimism with with the reality that wouldn't look at it past recessions.

Recessions are typically caused by policy mistakes raising taxes too much too soon cutting spending too much too soon.

The potential for real harm is there and and I don't think many people realize that the taxes are going up for everybody.

On January 1.

They're gonna hit at the lower end as a Social Security payroll taxes not that that two percentage point.

Temporary reduction is not going to be extended absolutely not and so so everybody's payroll with holdings are going to go up.

Early January.

Note the upper and you've got the Affordable Care -- taxes and then -- expiration -- expiration of the bush taxes yet so we're going to see higher taxes last year less money in your pocket no matter what and -- the bottom left the net net.

Kind of bottom line for for regular people mark that they're Wells Fargo as always thanks.

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