CBO Predicts Recession For US Next Year

The study conducted by the Congressional Budget Office (CBO) said on Wednesday that the political deal on the budget deficit last year will cause the economy to shrink by 0.5 percent in 2013. 

The CBO added that the jobless rate will also reach 9.1 percent by the second half of 2013 from the current 8.3 percent. 

The “fiscal cliff” plan is set to slash some $500 billion from the budget deficit, forecast at $1.1 trillion for this fiscal year. 

The CBO noted that more encouraging growth scenarios would unfold, should adjustments be made to the existing law. 

But since the August 2011 deal — a poison-pill agreement never meant to remain in place but to force a more palatable deal between battling Democrats and Republicans — politicians have not been able to agree on how to replace it.