WASHINGTON, Oct. 26 (UPI) -- A U.S. trade group said Friday the prospect of deep federal spending cuts in the absence of agreement on a new budget policy is already hurting the economy.
In a report Friday, the National Association of Manufacturers said the United States "is already struggling" due to uncertainty, with manufacturers putting off plans for expansion and new hiring. NAM President and Chief Executive Officer Jay Timmons said the uncertainty has resulted in "slowing economic growth and job loss in the manufacturing community."
The report, Fiscal Shock: America's Economic Crisis, said if mandated spending cuts are implemented and income tax cuts enacted during the administration of former President George W. Bush are permitted to expire as scheduled at the end of 2012 -- a combination of conditions that has come to be known as the fiscal cliff -- "another recession is almost guaranteed."
The report said if the economy is permitted to fall off the so-called fiscal cliff, the economy will lose 6 million jobs, the unemployment rate will spike to more than 11 percent, there will be a cumulative drop of 12.8 percent in the gross domestic product, a loss of 10 percent in household income, a recession in 2013 and "dramatically slowed growth" in 2014.
The Commerce Department reported Friday the U.S. economy grew at 2 percent during the third quarter.
"It is unsurprising that, according to recent surveys, 55 percent of manufacturers and other small business owners wouldn't start their businesses in today's climate," the group said in a statement.
The fiscal cliff was set up as part of a deal in which congressional Republicans agreed to raise the debt ceiling in 2011 in return for a commitment to lower the national debt.
The intention was to prove lawmakers were serious about cutting debt by penciling in mandated budget cuts and tax hikes should no other deficit-reducing budget find approval before the deadline.
The NAM report said if the U.S. economy goes over the fiscal cliff, it would take nearly a decade to recover from the loss of jobs and economic activity.
The trade association said the president and Congress must "address the unsustainable entitlement programs driving our national debt, halt the looming tax increases and sequestration that will push our nation off the fiscal cliff and enact pro-growth tax reform that will enable manufacturers to continue to lead our economy."