Business

Fed Presidents: U.S. Could be Headed For ‘Fiscal Cliff’ by the End of 2012

Two Federal Reserve presidents said Tuesday that the U.S. economy could be headed for a “fiscal cliff” by the end of 2012 if “mandated tax increases and spending cuts are implemented,” CNBC reports.

Charles Evans of the Chicago Fed referred to the cliff as a “big uncertainty.” At the same time, Atlanta Fed President Dennis Lockhart said the markets could experience “financial shock” if Congress and the White House remain in deadlock over how best to jumpstart the economy.

Fed Presidents: U.S. Could be Headed For Fiscal Cliff by The End of 2012Atlanta Fed President Dennis Lockhart

“The expected tax increases and spending cuts were triggered when a congressional ‘super committee’ failed to come up with a way of closing the federal budget deficit,” CNBC reports.

While speaking during the Milken conference in Los Angeles, the Fed presidents agreed recent GDP data was “disappointing” (to say the least), but disagreed with each other on the need for more stimulus.

“I’d like nothing better than to start raising rates before late 2014 on the strength of a stronger economy,” Evans told Squawk on the Street.

Watch the Fed Reserve officials discuss the state of the economy via CNBC:

The Chicago Fed chief said: “more liquidity would be helpful. It would ratify the idea that [Fed] policy is going to be accommodative for a very long time to get things going. Look, we might get lucky in the sense that … the channel opens up and we get a greater lift in the economy.”

However, instead of simply keeping rates low until late 2014, Evans argues the Fed should use “economic triggers” to “accommodate” low rates and high unemployment as it occurs.

The Atlanta Fed president disagreed, saying that although Q1 GDP and recent jobs data were “disappointing,” “I am a bit reticent to pull the trigger on any action. We have to see how the economy evolves. Pulling a number out of the air is a bit too simplistic.”

He added:

There’s only so much we can do to stimulate loan demand, and to change the risk appetite of the financial system or banks, so I’m not sure that more really active stimulus in the form of quantitative easing, for example, would have that much of an effect.

But the longer-term costs have to be kept in mind, costs related to inflation expectations, for example.

The Fed presidents both agree the Federal Reserve’s low interest rates are detrimental to savers.

Fed Presidents: U.S. Could be Headed For Fiscal Cliff by The End of 2012Chicago Fed President Charles Evans

“We’re in a tough situation and the current slow recovery is hurting everybody,” said Evans.

“[W]e can only have one policy, and that policy is designed to support the recovery. So unfortunately there are winners and losers,” Lockhart added.

Comments (73)

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  • Walkabout
    Posted on May 2, 2012 at 12:10pm

    “”The U.S. Cruises Toward a 2013 Fiscal Cliff” by Mr Blinder, Professor Princeton
    WSJ March 19, 2012 editorial

    http://online.wsj.com/article/SB10001424052702304459804577281233569546496.html

    Mr Blinder says that if we adopt austerity like Europe we will lose 3.5% points of GDP. If he is correct, & I believe the gist of his argument, then Paul Ryans’ Plan of not cutting the budget but not increasing budget or increasing by smaller amounts would work.

    Report Post »  
    • BuggiOlleo
      Posted on May 2, 2012 at 12:52pm

      Mr Walkabout,

      This little Pow-wow, these Professional Econo-MArxists are vomiting, or if you rather–flagellating–, appears to be none other than a solicit for your-our attention(ADD) for no longer than passing of gas to shelve into a shoe box for a whiff at a later date..or being forced by NWO powers to “eat”.

      Really, BHO doesn’t have to be the “One”; however, the “Whomever” is certain to be soon.
      If the Fed is not reigned back from the abyss, austerity will mean diddly. Hopefully, Ryan is only offering bait, which I believe that he is, for Progressive Boobi–ese to deny for none other than exploitation..its complicated–quite the drama, nyet, should we the people be nail biting awaiting New DC Blood or a doomsday scenario?..

      There is no more kick of the can and progressives Know this; my ONE prayer is that the Conservative realizes this symbolic Bone-up moment, and we use these precious few remaining moments to do what we do best— Capitalize on Weakness rather than Kow-tow to a Political Correct grave.

      .Do you play chess to win it? TJefferson says so so many Literal Proverbs–rightly so–but one I remember this moment– “rebellion is the compost of peace”–in essence-..My response, “If the quill is truly mightier than the sword, and, if this really is the nudge toward the abyss, can Ethical Honor between my fellow man be righted before the Great Capitaan Acheron upon the River Styx”.

      Report Post » BuggiOlleo  
    • lukerw
      Posted on May 2, 2012 at 1:04pm

      The Feds speak: Economic BS! The Feds are Printing Money as QE… so to prevent HyperInflation… they must suppress Velocity… which means they do not want Liquidity! So… saying they want Liquidity… is a Lie!

      Report Post » lukerw  
    • goldmind
      Posted on May 2, 2012 at 1:17pm

      The Mayan prophecy, about the world’s demise at the end of this year lacks one component…finance. Obviously, not an issue for the Mayans, given their preoccupation with sacrifice. Something way out of my league, but a financial apocalypse makes lots of cents. Greed, is still churning incessantly on Wall St and within the vaults of the banking industry. I’d be surprised, if we make it till the end of the year. Between the Occupy movement, and a country so obsessed with dollars and bills…a strong correction seems inevitable. And with a people so lustful for material things, it ain’t gonna be pretty.

      Report Post » goldmind  
    • soybomb315
      Posted on May 2, 2012 at 1:24pm

      @luke
      the inner circles of government economics want and need serious inflation. it is the only way they can reduce the effective debt burden

      Report Post » soybomb315  
    • lukerw
      Posted on May 2, 2012 at 1:55pm

      @SOY…
      I have given up thinking that the Administration has a Plan for Economic Recovery… or that they of an American Political Party. I believe… they think that America stole the Wealth of the World… and their Plan is to return it to the World… destroying America & it’s Systems in the process!

      Report Post » lukerw  
    • A Doctors Labor Is Not My Right
      Posted on May 2, 2012 at 2:38pm

      @soybomb315,

      “the inner circles of government economics want and need serious inflation. it is the only way they can reduce the effective debt burden”

      Spending needs to be less than revenues. This can theoretically be done by the people agreeing to higher taxes, or it can definitely be done by reducing government spending.

      Inflation caused the crisis to begin with, so more inflation will make it worse.

      The correction of 1920 happened in one year because the Fed was passive, and government slashed spending and taxes.

      As huge as the misallocations of resources the Fed has caused, and, accordingly, as huge as the loss in wealth will occur when the correction comes; the correction is inevitable. The crash is coming. It cannot be avoided.

      You cannot have economic recovery from the effects of artificial credit expansion without a recession. Government only makes the recession worse by trying to help.

      See here.

      Why You’ve Never Heard of the Great Depression of 1920 | Thomas E. Woods, Jr.
      http ://www.youtube.com/watch?v=czcU*****mnsprQI
      (Remove asterisks.)

      And here.

      Peter Schiff – The Fed Unspun: The Other Side of the Story
      http://www.youtube.com/watch?v=zdB9I79BQRI

      Report Post »  
  • drphil69
    Posted on May 2, 2012 at 12:09pm

    Nah, no worries. Obama will SAVE US! And us nutjobs clinging to our God and guns, buying gold, storing food… we will all be laughed at after ‘the saviour’ obama works his miracles!

    Report Post »  
  • Baddoggy
    Posted on May 2, 2012 at 12:02pm

    No s@it sherlocks…This just now the time you are getting a clue? 16 TRILLION in debt….What a bunch of looney toons we have giving us direction.

    Report Post » Baddoggy  
  • Viking64
    Posted on May 2, 2012 at 11:59am

    Several people I know, think Obama and his slick plotting Marxist cronies have always planned on taking the US economy off the cliff, so they will be there to help pick up and offer the destitute and scarred a new solution. If Obama is a true solution to anything?, I have no idea or curiosity as to what? Just hope he plain gets sacked this election and takes one way trip back to Kenya or some where far , where narcissists radical

    Report Post »  
  • MiCurmudgeon
    Posted on May 2, 2012 at 11:59am

    And, President Oblamer’s is do nothing and blame everyone!!

    Report Post »  
  • BuggiOlleo
    Posted on May 2, 2012 at 11:58am

    Brilliant.. ! Global Warming for the Global Financial system…

    Wow, Do something or nothing? Truly Shakespearean…Let’s just do what we have now, kill off all severely disabled, limit child birth, institute Marshall law, ration food and water, and..the possibilities are endless..As long as “I” am in charge doing mindless pandering to YOU..not me because ‘I’ in charge.

    PS don’t forget to take your Healthy Arsenic Lased Vitamin today..Global Population Too High…Hey Charles, do you still have that awesome endangered Beluga..I’m kinda hungry.. for your soul

    . Dear God, the MSM is complicit while we are praying for a miracle between now and NOV2012—-VOTE

    Report Post » BuggiOlleo  
  • MittensKittens
    Posted on May 2, 2012 at 11:56am

    The POTUS is a P.O.S. and know exactly what he’s doing, the problem is there are so many variables not taken into consideration. If our economy does fail, and people rise up against the government. He’ll need alot more than the secret service to protect him…

    Report Post » MittensKittens  
  • dont_tax_me_bro
    Posted on May 2, 2012 at 11:51am

    Im all for being prepared. But how long has Beck been preaching the end of the world type of stuff and its never happened?!?!?! Its in Becks Mormon blood to be a constant fear monger.

    Report Post » dont_tax_me_bro  
    • AnOregonian
      Posted on May 2, 2012 at 12:02pm

      Your post is such crap. If you can’t see the signs of an impending crisis yourself, your either lost or in a coma.

      Report Post » AnOregonian  
    • johnjamison
      Posted on May 2, 2012 at 12:13pm

      Mean while Obama just signed a new agreement with afganistan to send more tax dollars to their country.
      Here’s an idea cut all foriegn aid,cuts the Non Military federal employment in half, make its a criminal law for Congressman to spend any money on special interest group,close unConstitutional unelected government agencies that tax citizens without congressional approval like the FCC,DOGWL,EPA,FDA,DOE,DOE,and other like them. We have FBI,CIA,ATF,HLS,AND NSA We need only one Federal Police agency and that agency should never have the power stronger than the state they are operating.

      Report Post »  
    • Critical Thinker
      Posted on May 2, 2012 at 3:18pm

      Actually, Glenn has shown a very strong track record on accurate predictions. He may not get everything right, but he is correct more often than not.

      Report Post » Critical Thinker  
    • JRook
      Posted on May 2, 2012 at 5:46pm

      @Critical Thinker You might want to do some research and realize that GB merely chooses one of two well researched and debated sides of many issues. As is usually the case the reality generally includes aspects of both sides of the debate. So similar to the fortune teller GB can usually claim after the fact that he held the correct position. Again positions that were very rarely identified by him first.

      Report Post »  
  • Itsjusttim
    Posted on May 2, 2012 at 11:51am

    Well lets see, all the people who work for the Fed, and all the politicians in government will have to extremely reduce their life-styles for any solution to be found. I guess they won’t find a solution.

    Report Post » Itsjusttim  
  • Unix
    Posted on May 2, 2012 at 11:50am

    These yahoos must not buy GAS for the cars or FOOD for their families??? Inflation is a problem NOW, what are they thinking, we are dumb? My goodness, GAS is up 110% year over year, and food is around the same increase…a pound of bacon is 6.50 today when it was 3.00 last year!!!! These guys are head and shoulders in the SAND!

    Report Post » Unix  
  • cuinsong
    Posted on May 2, 2012 at 11:48am

    The dim’s only know how to tax & spend! Other then womanizing that is about it. No morrows or integrity in them so why in the name of sanity would you vote for this kind of person? Their song is “The Devils Song” http://www.reverbnation.com/play_now/song_10789987

    Report Post » cuinsong  
  • Frodo RinosBane
    Posted on May 2, 2012 at 11:47am

    The White House is dead wrong and they know it. “Recovery” is the wrong word when every indicator is trending down. The lies continue, and Congress better call POTUS on the carpet and put his lies to bed.

    Report Post » Frodo RinosBane  
    • Beckofile
      Posted on May 2, 2012 at 1:34pm

      They spell it Wrecovery. Still driven bush car toward cliff.

      Report Post » Beckofile  
  • RANGER1965
    Posted on May 2, 2012 at 11:38am

    Large Tax Increase=Large Layoffs
    Large Layoffs=More Spending for Unemployment, Food Stamps, and Other Social Programs.
    Less People Working=Less Taxes to Spend on Social Programs
    Less Money to spend=Hoarding
    Hoarding=Economic Death.

    I’ve always wanted to go to Greece. Now, thanks to Obama, I don’t have too! Greece is coming to me!

    Woohoo!

    The Long Night is Coming

    RANGER

    Report Post » RANGER1965  
    • docgreen
      Posted on May 2, 2012 at 11:54am

      I don’t think people realize that the Fed has been loaning money to the IMF and Banks,countries over seas. This is part of the reason why I kept saying we need to Audit them. The only problem; they woudn’t let us. Please keep in mind, its going South for obamanation and people hate what he’s doing, he do this to retain power. The only way for him to get elected, Crash the dollar and all other currency’s fall. I’ve been saying the New World Order Currency is ready and waiting to be thrust into the World and God Help US when this happens. “SLAVERY”, its just like the Bible states. Henry kissinger stated that obamanation of desolation will head the New World Order! He knows whats about to happen, this has been set up for a long time and its caused by the NEW WORLD ORDER!… GOD HELP US!…..

      Report Post »  
    • RANGER1965
      Posted on May 2, 2012 at 12:17pm

      I hope your wrong Doc, but I fear you may be right.

      I watched a real Nihilistic movie last night called Fight Club. In the end of that movie the (hero?…might be the wrong word here), blows up multiple buildings that store the credit records of every person. Everything from mortgages to credit card debt.

      The idea was to reset it all back to 0. No one is in debt, no one owes anyone anything. If I owe 100k dollars, and the dollar is replaced as a currency, then the mortgage contract is null and void.

      But in your scenerio this dollar is replaced wtth a world currency and world leadership that leads to the Antichrist.

      But here’s the rub. Imagine for a moment that a proposal is floated that is effectively a reset switch. All debts are forgiven. Do you realize that almost everyone except for the big creditors would be WILDLY enthusiastic about it?

      RANGER

      Report Post » RANGER1965  
    • docgreen
      Posted on May 2, 2012 at 7:38pm

      Ranger, I think people would love to reset to 0. What would be worse for us all? Here’s a couple more things to think about. Why is our Govt. Stockpiling food?

      http://theeconomiccollapseblog.com/archives/is-the-u-s-government-stockpiling-food-in-anticipation-of-a-major-economic-crisis

      Then after that why did D.H.S. go out and purchase this?

      http://endoftheamericandream.com/archives/why-does-the-department-of-homeland-security-need-450-million-hollow-point-bullets

      Not only that they also purchased allot of rifle rounds. Its not just a few rounds either and 450 million rounds. Something is going on!

      If those things don’t scare you then this may.

      http://chicago.cbslocal.com/2012/04/25/milwaukee-red-cross-told-to-prep-for-chicago-evacuation-during-nato-summit/

      and the last is this.

      http://www.suntimes.com/news/metro/12151651-418/local-nato-hosts-red-faced-over-red-zone-militarization-plan.html

      What in the World is going on with our Country? Its like its becoming militarized. What is they know and we don’t. Last as far as the 450 million rounds. Why D.H.S. instead of our military. Something bigger is happening and its not good. Is it coincidence that we have 311 million people in the US and they ordered 450 Mil. rounds?

      Report Post »  
    • docgreen
      Posted on May 2, 2012 at 7:42pm

      One other thing, I keep hearing Obama blame the Banks and the Bundlers for the Housing mess, but yet who regulates the Banks? The Federal Reserve! So why haven’t people asked him straight out, about this? I think it would be a great Question for him to answer since he appoints them!

      Report Post »  
    • socialism.rocks
      Posted on May 2, 2012 at 9:48pm

      you forget the big banks b.o.a goldman chraps ….they hold trillions of dollars of e.u debt
      watch spain or italy say nodda nill we will default then go through austerity which will impload those not to big to fail banks that is what coming the crapitalists for shorting the euro causing the european collapse
      now the socialists with the knowledge of economic terrorism done by the capitalists are going to return the favor and just plain default
      all is fair in economic warfare …. thats capitalism
      just wait france spain italy can and will default then go through austerity screwing the crapitalists
      it has nothing to do with the federal reserve… they can only do so much…
      its the hedge funds-and big crapitalists- banks which are going to cause epic doom failure mark my words…
      the fed cant stop the big banks- from imploading nothing can stop the trainwreck that is coming

      one day you will wake up and hear germany leaving the euro… and poof~
      why would anyone in their right mind not default then go through austerity instead of going through austerity and losing on the bottom end and top end… with the crapitalist grinning

      Report Post » socialism.rocks  
  • soybomb315
    Posted on May 2, 2012 at 11:35am

    dont worry, mitt romney’s budget will balance the budget by 2030

    Report Post » soybomb315  
  • discus02
    Posted on May 2, 2012 at 11:34am

    Get a very long train put Obama and all his followers on it and give them a one way ride to hell!

    Report Post »  
  • AmazingGrace8
    Posted on May 2, 2012 at 11:30am

    There are many places in Mt. and probably elsewhere that have history about a “Sacrifice Cliff”. Various reasons and the “procedure” to complete “the ends” but there is one “set-up” that was quite common….Go over the cliff BLINDFOLDED. Just saying.

    Report Post »  
  • rabidamerican
    Posted on May 2, 2012 at 11:22am

    You can bet that this is not the only trap laid by the mutts in this administration……

    We’re headed straight at the brick wall, 120MPH, no brakes………. and either Barry loses and jumps out of the car or Barry gets the airbag and we get the windshield……..

    Report Post » rabidamerican  
  • Tri-ox
    Posted on May 2, 2012 at 11:21am

    “COULD BE”? How about “IS” – thanks to obama. This is all part of obama’s plan to destroy the United States of America.

    Report Post » Tri-ox  
    • soybomb315
      Posted on May 2, 2012 at 11:43am

      both parties are clueless. republicans have failed every time they get in power

      republicans have the house, which means they control spending. they could cut obama off at the knees if they wanted to…..they dont

      Report Post » soybomb315  
    • Walkabout
      Posted on May 2, 2012 at 12:15pm

      Ya, any budget that a non RINO proposes is called DOA by the MSM & the Democrats. So of course Republicans will fail.

      Paul Ryan’s budget of not increasing budgets by large amount or not at all was called stupid by the MSM & Duke Harry Reid of the Senate.

      Report Post »  
    • blackyb
      Posted on May 2, 2012 at 12:18pm

      It must be, for no one is as stupid as he has been. It has to be by intent.

      Report Post » blackyb  
    • Bill Burns
      Posted on May 2, 2012 at 1:49pm

      SOY: Obama’s last 2 budgets were defeated 414-0 in the House and 97-0 in the Dem Senate but the monkey man is still in office – We’ll need to remove him in November but he has 47% of the vote already locked in.

      Most folks are unaware O ran up $5 trillion in annual deficits in one term; more than ALL other Presidents COMBINED.

      Report Post » Bill Burns  
    • soybomb315
      Posted on May 2, 2012 at 3:05pm

      Republicans can end this thing right now if they wanted to – by not authorizing any more continuing resolutions (CR). Democrats have not passed a budget in years – for obvious reasons.

      As evidenced above, republicans will continue to make excuses for their pathetic record as defenders of the constitution and unwillingness to attack the socialists in this government.

      Report Post » soybomb315  
  • silentwatcher
    Posted on May 2, 2012 at 11:18am

    Gee, I wonder why? is it, in part, because the current gov‘t doesn’t have a budget and spends without limits? or is it because our current gov’t spends with violent waste? or maybe because free money, in the form of questionable loans is granted to special groups favored by the current gov‘t and won’t get paid back?
    How about fraud committed on the U.S. taxpayer by citizens of other countries that are known by our current gov’t?? Here’s a good one for ya….just learned (national news) that ILLEGAL immigrants are filing their income taxes and claiming up to 20, yes 20, dependants who are not even in the U.S. Some are using the same addresses in Mexico as other filers, which leads one to believe they may be claiming nieces and nephews. Income tax refunds from 20-29 THOUSAND dollars. Here’s the kicker,,,,the IRS HAS KNOWN ABOUT THIS FOR DECADES. U.S. citizens get audited and fined for this activity,,,but illegals don’t. Think they will do anything about it? No. Annual cost for this to the U.S. taxpayers???? 2.3 billion dollars per year.

    Something else to think about-you MUST have a social security number to file taxes. How does an illegal immigrant get a social security number? How many more BILLIONS of dollars is this costing the U.S. taxpayer per year? Had enough??

    Ron Paul for President of the

    Report Post »  
  • doomytram
    Posted on May 2, 2012 at 11:14am

    NO DUH! Keep spending borrowed money Oblamer! Keep prosecuting a baseball pitcher Harry Reid’s Senile Senate! The senate wants to put a baseball pitcher in Jail for lying to the Senile Senate, oh but they can lie to us all they want!

    I’m just saying and I have just been saying that we are the Soviet Union of Greece! Oblamer wants to put McDonalds workers in charge of your health care and Ditch Diggers in charge of taxing you into oblivion. He wants his bunch to take over everything you do! Commies!

    Report Post » doomytram  
  • Gonzo
    Posted on May 2, 2012 at 11:13am

    Well, that should drop the Dow by a couple hundred today.

    Report Post » Gonzo  
  • Ruler4You
    Posted on May 2, 2012 at 11:12am

    Let’s be clear, as the POTUS would say, this won’t be a “consideration” until AFTER the election. No one does the ‘right thing’ any more.

    We won’t hear a cry in the darkness, there will be no warning, congress won’t act, the FED will wait until disaster can not be avoided or it happens before idiots can predict (like the recession), warning won’t happen until inside traders can redirect their investments into “safe” havens.

    Don’t be fooled. Fool me once, shame on you. Fool me twice, shame on me.

    “We don’t get fooled again.” The Who.

    Get smart. WE are being used as TOOLS! Pull your head OUT, sniff the air. Head toward the sweet scent of SMART.

    Report Post » Ruler4You  
  • Snowleopard {gallery of cat folks}
    Posted on May 2, 2012 at 11:10am

    As I have been warning lately – just before the elections the matters of the economy will slam home on these points from Obama:

    The Debt Ceiling Battle
    No Budget for 3 years
    The National Debt

    The media will play this up to the point of hysteria even larger than the last debt ceiling “crisis” and combine it with the radicals of the Occupy bands. Look for it to hit the air around june/july in the first warning signs and talks; then grow and grow in intensity.

    They of the leftists have only one card they can try and play: FEAR

    Report Post » Snowleopard {gallery of cat folks}  
    • CatB
      Posted on May 2, 2012 at 11:25am

      @SNOW

      Many are coming to the realization that what they “FEAR” is the tyrant and his goons (this may backfire on Obama and Company)… I pray enough come November to put this regime out!

      LIBERTY 2012

      Report Post »  
  • CatB
    Posted on May 2, 2012 at 11:09am

    I predict a complete financial meltdown .. November 7th if Obama is re-elected. If not the recovery begins November 7th.

    Report Post »  
    • dont_tax_me_bro
      Posted on May 2, 2012 at 11:53am

      It involves much for than one person. Obama is just a puppet. His control over the economy and financial regulations isnt as much as you think

      Report Post » dont_tax_me_bro  
    • CatB
      Posted on May 2, 2012 at 12:37pm

      Doesn’t matter .. he is the FACE of America’s destruction.

      Report Post »  
  • Conservative_T-Rex
    Posted on May 2, 2012 at 11:07am

    Tell me something I don’t know.

    game/quiz for you fox news watchers: http://www.sporcle.com/games/Bohnfather/fox-news-personalities

    Report Post »  
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