US Fiscal Cliff

Fears over the US Fiscal Cliff were averted in January 2013 following a last minute deal to postpone the effects to the second quarter. If a last minute deal had not been reached, this would have triggered automatic tax rises and spending cuts amounting to $85 billion which would have sent the US economy into recession. The new deal by the government has simply “kicked the can down the road” until the next deadline arises. News that the Fiscal Cliff issue was “resolved” resulted in a boost to the US stockmarket with the Dow Jones and S&P 500 rising to all time highs in early 2013.

In March 2013, the US government were unable to postpone the sequestration, or spending cuts to healthcare and social security. However, this appeared to go unnoticed by the markets as equities continue to rise as at the current day and appear oblivious to the fact that the issues regarding the rising government deficit have not been fully addressed.