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IPFS News Link • Economy - Economics USA

GOLDMAN: The Middle Class Won't Do Too Bad If We Go Off The Fiscal Cliff

•, Matthew Boesler
 The "fiscal cliff" looms in the United States as lawmakers face the possibility of automatic tax increases and spending cuts at the beginning of next year unless a deal can be reached to avert them.

The economic effects of "going over" the "fiscal cliff" would be pretty severe, according to most analysts – JPMorgan, for example, estimates such a scenario would knock 3.5 percent off GDP growth in the first quarter of next year alone.

Now, it's become the biggest worry among fund managers, according to a recent BofA survey.

Goldman Sachs economist Alec Phillips has an interesting perspective on the effects of the cliff, though, in a note to clients today: he writes of the adverse scenario of going over the cliff that "the effect on the lowest and highest income groups is likely to be greater than the effect on groups in the middle."