May 24, 2012 - The US looks set to endure a period of recession next year unless alternatives to the government's strict financial reforms can be found, a new report has warned. Figures from the Congressional Budget Office (CBO) in its latest analysis of the American economy have estimated that the country could experience gross domestic product (GDP) contraction of 1.3 per cent in the first half of 2013.
At present, the administration is planning to implement austerity measures towards the end of this year as it attempts to encourage long-term stability in the US, such as tax rises and spending cuts. However, the CBO - an independent body set up in 1974 - believes that while such policies would cut the government's deficit by around $607 billion, they could also plunge the world's leading financial powerhouse into recession.
This, the organisation added, has been described by experts as the equivalent of falling from a "fiscal cliff" and could therefore raise doubts about America's long-term economic health.