Sequester Effects

Although we averted the effects of the fiscal cliff at the beginning of the year, the American economy still faces a sequester at the beginning of March – a slew of cuts to government spending designed to bring the deficit down, unless Congress acts otherwise. It’s not clear what the effects of this will be, but there’s a consensus emerging that it will hamper the economy over the course of the year.

But the predicted impact doesn’t appear too terrible. J.P. Morgan has lowered its forecast for GDP growth over the entirety of 2013 to 1.9 percent, down from 2.1 percent. The bank also estimated that unemployment would be at 7.6 percent by the end of the year, down from its current 7.9 percent.

It’s in unemployment that the sequester will probably be felt the most. The budget cuts could conceivably cost the economy 750,000 jobs over the course of 2013 alone, according to Congressional Budget Office director Douglas Elmendorf.