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Nomura U.S. Chief Economist Lewis Alexander on the economic impact of reaching the fiscal cliff.
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So many believe speaker Boehner is -- would be.
Bill was going to die in the senate but he didn't even make it through the house vote last night when do we have a resolution my next guest -- -- is not confident.
That it's gonna happen before the new year.
With me now is no more securities chief US economist Lewis Alexander discuss how fiscal -- uncertainties affecting the economy we're certainly seeing it.
Take a chunk out of the markets do you think they're gonna come up with a deal before -- -- we go flying over the edge that Clinton.
But it is an obvious that they have you me and -- media way forward -- obviously see what the president says.
Well obviously see -- -- of -- -- discussions with members of congress.
But after what's happened this week it just isn't clear what the way forward is and it's a short time until the end of the year.
So I think there is it's better it's more likely than not that we're gonna role in the January without a deal.
So what really means the economy -- what -- the tangible things that the average person would see.
Well there first of all.
Taxes are gonna go up there's a question of how quickly they'll actually see it in their take home pay.
It's up to businesses to decide when they change their withholding given the -- around the -- may not be immediately.
There is some spending programs that are going to be affected.
But there's also just what happens in markets the degree to which businesses hold back from doing investment -- hiring because they're uncertain about the outlook.
There are a variety of ways in which it's gonna show up in the first quarter.
I mean you really think this is gonna happen at this point.
That we're not gonna get this deal they're not gonna step in at the last second and say.
You know -- we can't come to a deal but we're gonna hold off raising taxes on everyone.
I think it's I think they've got a long way to go to reach a deal at this point I think one of things we've learned is.
The differences are so much on the tax side as they are on the spending side.
The disagreements that you saw between what Republicans in the house are willing to support.
And what the president president and the Democrats are prepared offer.
That gap is still there and I I don't see a good way of closing it in those days who we have before the end of the year.
Now there will keep negotiating I think to a certain extent you can make too much.
Just rolling in the Jan one.
They're gonna continue negotiated I would expect to get a deal done relatively quickly.
But it's I think it's getting late for it to get down by the end of the year.
Is long term impact immediately go over the first of the year and then there's a lot of panic and they get together they get a deal done is there a long term -- the economy or is it not that big of a deal and really everybody's getting.
Excited about nothing.
But the gold.
Locally if you come do a good agreement that puts the US fiscal policy and a good path going forward I think they've been negative effects don't have to be huge.
But I think you are seeing a gradual sort of undermining of -- sense of confidence in the US and extent that we have these difficulties making these decisions.
I think ultimately what matters is -- that process matters to.
All right thanks so much for coming -- we appreciate we break.
