John Harvey — Our Christmas Gift from Washington: Recession and Unemployment

At this very moment, our government is carefully selecting our present (although, strictly speaking, we won’t be receiving it until 2013). They haven’t decided on the size yet, but they know exactly what they’re getting us: recession and unemployment.

The deficit reduction talks, with or without a fiscal cliff, will absolutely lead to a decline in the level of demand for American goods and services. About this there is no controversy whatsoever. Even under the most optimistic of scenarios, wherein the President and Congress agree on some compromise level of deficit reduction, we will see a one to two percentage point reduction in real GDP growth and an increase of around one million unemployed. If we fall off the fiscal cliff, costs will be roughly double those. This is the kind of gift we need to return as soon as possible.

Forbes | Pragmatic Economist
Our Christmas Gift from Washington: Recession and Unemployment
John T. Harvey | Professor of Economics, Texas Christian University

This is about as clear and simple as one can make it. Good work, John.