Washington’s drag on the economy now springs from a multiplying array of sources, including the constant threat of devastating fiscal crisis, the blunt nature of the sequester spending cuts, the troubled roll-out of Obamacare and the now deeply strained relations with key economic allies over clandestine surveillance allegations.
Taken together, Washington’s toxic politics and poorly executed policies have all but ensured that fourth quarter growth comes in soft after forecasters initially predicted a strong close to the year. And they mean that 2014, which initially looked like a possible breakout year for the U.S. economy, now seems like it will be a dreary rerun of 2013 featuring sluggish growth, modest job creation and stagnant wages.
“The fourth quarter is now going to be much weaker than I expected,” said Beth Ann Bovino, chief U.S. economist at Standard & Poor’s. “And now all these fiscal deadlines are pushed into January and February and that’s going to weigh on 2014. I don’t think we breach the debt ceiling next year, but it’s hard to see any long-term resolution given the very toxic environment on Capitol Hill.”