Consumers seem to have little concern about the upcoming fiscal cliff. Instead, businesses are the primary discussion holders of the billions of dollars in looming tax hikes and spending cuts due to come into effect January 1, 2013.
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But consumer confidence surged to its highest levels in October since before the recession. A survey by RBC Capital Markets early in the month showed that consumers either were not following updates on the fiscal cliff or simply were not worried about it.
Most say that until it hits their local news media, most people will not understand or be concerned about the fiscal cliff.
But as all the tax cuts from the Bush era expire along with the temporary reduction in payroll taxes put in place since 2011, about 90% of Americans will see their taxes increase.
The average household could pay as much as $3500 more in taxes in 2013. Combined with severe cuts in spending, the fiscal cliff could throw the US economy back into recession from its still-fragile recovery.
Economists say the payroll tax alone would cut .6% from economic growth—a big hit to the projected rate of only 2% during the first quarter of 2013.
Several areas of the economy, primarily construction, housing, retail sales, and the job market, are all improving but at different rates across areas of the country and not with great momentum.
It may not even take the actual occurrence of the fiscal cliff to derail the economy
. The last time Congress failed to take appropriate action was with the debt ceiling. Consumer confidence plunged but actual spending was not really hurt.
A broader and much more anticipated result among businesses could have greater impact after the election is over if Congress does not show signs of action immediately upon return from its current recess.