News / Economy

    Markets Surge, New Crisis Looms after Partial 'Fiscal Cliff' Deal

    Traders work on the floor at the New York Stock Exchange in New York, January 2, 2013.Traders work on the floor at the New York Stock Exchange in New York, January 2, 2013.
    x
    Traders work on the floor at the New York Stock Exchange in New York, January 2, 2013.
    Traders work on the floor at the New York Stock Exchange in New York, January 2, 2013.
    Carolyn Weaver
    World markets greeted 2013 on a high note Wednesday after the U.S. Congress and President Barack Obama reached a last-minute deal to avert a financial crisis that analysts say could have sent the United States into a recession.  But experts say a potential crisis in the world’s largest economy has yet to be resolved.

    Late Tuesday, the U.S. House of Representatives approved a partial deal to avert more than $500 billion in spending cuts and tax increases.  In the United States, key stock markets soared, with the Dow Jones Industrial Average ending the day two percent higher, the Standard &Poor's 500 climbing 2.5 percent and the Nasdaq Composite Index advancing three percent.  Stocks also surged in Europe and Asia.

    But analysts caution that investor optimism will be short-lived, as the so-called “fiscal cliff” agreement between President Obama and Congress delays for two months decisions about large federal spending cuts.

    Jeff Sica of Sica Wealth Management says that although the legislation avoided what he called the “worst possible” outcome, he expects that new, higher taxes will reduce hiring by small businesses and decrease the nation's gross domestic product.

    “I see that the slowdown is going to continue, and that most of all, the slowdown is going to involve confidence.  And primarily because we have so many open-ended issues to deal with -- taxes and the debt ceiling -- there’s going to be a level of uncertainty that’s going to thwart a lot of the potential future growth economy,”  Sica said.

    Sica predicts that fresh debate about raising the U.S. debt ceiling will begin within days, and that compromise on that issue will be far harder to reach.

    “I don’t anticipate that the solution is going to be what the solution was last time, which was to raise the debt ceiling.  I anticipate that this time around it’s going to involve some degree of spending cuts, because even the president himself agrees that the deficit is too high,” Sica said.

    The United States reached its borrowing limit on Monday, at $16.4 trillion.  Officials say the country will be able to pay its bills for another two months, but by then will need to increase the debt ceiling -- an action likely to spark another extended debate over Washington's spending priorities.  Experts say the issue will be addressed in February, when President Obama presents his budget for the 2014 fiscal year that begins on October 1.

    You May Like

    US Leaders Who Served in Vietnam War Look Back and Ahead

    In New York Times opinion piece, Secretary of State John Kerry, Senator John McCain and former Senator Bob Kerrey say as US strengthens relations with Vietnam, it is important to remember lessons learned from war

    Trans-Adriatic Pipeline to Boost European Energy Security

    $4.5 billion-pipeline will become operational in 2020 and will deliver gas from Azerbaijan’s Shah Deniz II field to southern Italy

    Video California Celebration Showcases Local Wines, Balloons

    Annual festival showcases the region's harvested agriculture, fine wines and offers opportunities to experience the gentle breeze in a hot air balloon flight

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Vietnamese-American Youth Optimistic About Obama's Visit to Vietnami
    X
    Elizabeth Lee
    May 22, 2016 6:04 AM
    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video Vietnamese-American Youth Optimistic About Obama's Visit to Vietnam

    U.S. President Barack Obama's visit to Vietnam later this month comes at a time when Vietnam is seeking stronger ties with the United States. Many Vietnamese Americans, especially the younger generation, are optimistic Obama’s trip will help further reconciliation between the two former foes. Elizabeth Lee has more from the community called "Little Saigon" located south of Los Angeles.
    Video

    Video First-generation, Afghan-American Student Sets Sights on Basketball Glory

    Their parents are immigrants to the United States. They are kids who live between two worlds -- their parents' homeland and the U.S. For many of them, they feel most "American" at school. It can be tricky balancing both worlds. In this report, produced by Beth Mendelson, Arash Arabasadi tells us about one Afghan-American student who seems to be coping -- one shot at a time.
    Video

    Video Newest US Citizens, Writing the Next Great Chapter

    While universities across the United States honor their newest graduates this Friday, many immigrants in downtown Manhattan are celebrating, too. One hundred of them, representing 31 countries across four continents, graduated as U.S. citizens, joining the ranks of 680,000 others every year in New York and cities around the country.
    Video

    Video Vietnam Sees Strong Economic Growth Despite Incomplete Reforms

    Vietnam has transformed its communist economy to become one of the world's fastest-growing nations. While the reforms are incomplete, multinational corporations see a profitable future in Vietnam and have made major investments -- as VOA's Jim Randle reports.
    Video

    Video Qatar Denies World Cup Corruption

    The head of Qatar’s organizing committee for the 2022 World Cup insists his country's bid to host the soccer tournament was completely clean, despite the corruption scandals that have rocked the sport’s governing body, FIFA. Hassan Al-Thawadi also said new laws would offer protection to migrants working on World Cup construction projects. VOA's Henry Ridgwell reports.
    Video

    Video Infrastructure Funding Puts Cambodia on Front Line of International Politics

    When leaders of the world’s seven most developed economies meet in Japan next week, demands for infrastructure investment world wide will be high on the agenda. Japanese Prime Minister Shinzo Abe’s push for “quality infrastructure investment” throughout Asia has been widely viewed as a counter to the rise of Chinese investment flooding into region.
    Video

    Video Democrats Fear Party Unity a Casualty in Clinton-Sanders Battle

    Democratic presidential front-runner Hillary Clinton claimed a narrow victory in Tuesday's Kentucky primary even as rival Bernie Sanders won in Oregon. Tensions between the two campaigns are rising, prompting fears that the party will have a difficult time unifying to face the presumptive Republican nominee, Donald Trump. VOA national correspondent Jim Malone has more from Washington.
    Video

    Video Portrait of a Transgender Marriage: Husband and Wife Navigate New Roles

    As controversy continues in North Carolina over the use of public bathrooms by transgender individuals, personal struggles with gender identity that were once secret are now coming to light. VOA’s Tina Trinh explored the ramifications for one couple as part of trans.formation, a series of stories on transgender issues.
    Video

    Video Amerikan Hero Flips Stereotype of Middle Eastern Character

    An Iranian American comedian is hoping to connect with American audiences through a film that inverts some of Hollywood's stereotypes about Middle Eastern characters. Sama Dizayee reports.
    Video

    Video Budding Young Inventors Tackle City's Problems with 3-D Printing

    Every city has problems, and local officials and politicians are often frustrated by their inability to solve them. But surprising solutions can come from unexpected places. Students in Baltimore. Maryland, took up the challenge to solve problems they identified in their city, and came up with projects and products to make a difference. VOA's June Soh has more on a digital fabrication competition primarily focused on 3-D design and printing. Carol Pearson narrates.

    Special Report

    Adrift The Invisible African Diaspora

    World Currencies

    EUR
    USD
    0.8954
    JPY
    USD
    109.74
    GBP
    USD
    0.6851
    CAD
    USD
    1.3148
    INR
    USD
    67.673

    Rates may not be current.