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Justin Kuepper

U.S. (Mostly) Averts Fiscal Cliff Disaster

By January 2, 2013

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The U.S. Senate passed a budget deal in a late-night session to avoid the so-called "fiscal cliff", but the decision came at a high cost that could lead to more uncertainty. The current deal would raise taxes on 77.1% of U.S. households due to the expiration of the payroll tax cut, according to Bloomberg News citing the Tax Policy Center in Washington.

The U.S. stock market rose sharply on news of the deal, but could struggle to keep those gains long-term, given the skew towards revenue versus spending cuts. Tax increases could further depress consumer spending in 2013 and beyond, leading to reduced demand from China and subsequent lower demand for commodities from many other emerging markets.

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