Risk of Fiscal Cliff “Lessened” – Fitch Ratings

The implication here appears to be that the Congress understands the threat that the fiscal cliff presents not only for the U.S. economy, but also for the global economy and that the Congress will take some action — even if it is only to kick the can down the road for a few months. Fitch believes that if the U.S. falls off the fiscal cliff the impact on the global economy would be worse than another eurozone shock.

Inflation is not expected to be a big risk into next year, at least not for the federal government. Fitch notes, however, that flat yield curves mean that low investment returns are a disincentive to savings and “result in an inflationary impact on those on fixed incomes.”

Take a look at our list of U.S. companies that will survive a tumble off the fiscal cliff.

The “Risk Radar” report is available here.

Paul Ausick