The best news about averting the fiscal cliff may come from what lies beyond — a bit of headroom for the economic recovery.
Economists
think that if Washington follows through on its late Monday deal to
avoid the cliff’s largest tax increases and spending cuts, 2013 could
turn out to be OK.
“There’s a better story out there if we just
get Washington out of the picture for a while,” Ethan Harris, an
economist at Bank of America Merrill Lynch, said during an outlook
session last month.
Lawmakers still have votes to take and face
negotiations on raising the debt ceiling so the U.S. Treasury doesn’t
run out of money in about two months. And there’s still a battle ahead
on bringing down long-term federal deficits.
But word Monday
afternoon of a possible fiscal cliff deal helped the Dow Jones
industrial average add 166.03 points to finish 2012 at 13,104.14, a gain
of 1.28 percent. Its rally preserved a decent year for investors, with
2012 lifting the Dow by 7.25 percent.
It was the fourth straight up year for the Dow.
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