USA TODAY: ….The initial cuts in fiscal year 2012 aren’t dramatic, amounting to $22 billion, or about 0.2% to 0.3% of gross domestic product, according to High Frequency Economics. But with the Obama administration’s 2009 stimulus petering out this year, the debate on Capitol Hill over more cuts will become heated if growth fails to pick up as much as most economists expect later this year.
There are plenty of signs that the economy is losing momentum, in part because of concerns sparked by the debt-ceiling debate. Last week, the Commerce Department reported that GDP grew at a disappointing 1.3% annual rate in the second quarter. Monday, a report showed that manufacturing activity in July grew at its weakest pace in two years. The report by the Institute for Supply Management indicated that uncertainty over the outcome of the debt-ceiling debate was a drag on business last month
Consumers are nervous. A Gallup Poll conducted Wednesday through Friday, during the heat of the debt-ceiling debate, showed that 79% of Americans believe that economic conditions are getting worse, the highest percentage since Gallup added the question to its daily tracking poll in November 2009 and 16 percentage points higher than on July 8.… (more)
