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Fiscal Cliff News Greets the Markets, Leads to Falling Prices
Posted By AIM Newswire On November 28, 2012 @ 3:00 pm In AIM Newswire | No Comments
WASHINGTON — On Monday, when traders returned to work after the Thanksgiving holiday, they came back to the concerns about the impending U.S. fiscal cliff and the ongoing and worsening European debt crisis.
The stock market continues its negative trend, falling in the midday trading as lawmakers and business groups argued over tax and spending rates in the immediate future. All this while the European leaders struggle to concoct the right formula for yet-another bailout loan for Greece. The news will not getting better anytime soon, some analysts predict.
The Dow Jones industrial average was down 91 points at 12,919 as of noon. The Standard & Poor’s 500 was down eight at 1,401 and the Nasdaq composite index slipped seven points to 2,960. But, other than that, no big business announcements or economic reports.
It’s still difficult to gauge how this holiday shopping season will wind up for retailers, who rely heavily on the upcoming Christmas season. The National Retail Federation reported that 247 million shoppers visited stores and shopping websites during the long Thanksgiving weekend, up 9 percent from a year ago. They spent an average of $423, up 6 percent. However, some analysts warn that this momentum will not last. For example, retailers like Macy’s, Target and Saks were down in early trading. Abercrombie & Fitch was the only exception.
The blame lies on the overhanging and foreboding fiscal cliff. The fiscal cliff is when higher taxes as well as cuts to government programs will go into effect, where only a compromise between Congress and the White House is worked out. Right now, that is highly unlikely and very frustrating. But, this is what happens when American voters clamor for change yet vote for the status quo. Nothing will change in the near future until the next congressional election cycle in 2014.
A government report released this past Monday warned that a sudden increase in taxes will cripple the spending of middle class families next year, and some analysts wondered if the uncertainty might hurt spending earlier, throughout the rest of the holiday season.
The report, by President Barack Obama’s National Economic Council and his Council of Economic Advisers, estimated that a married couple earning between $50,000 and $85,000 with two children would see a $2,200 increase in their taxes. So much for his campaign rhetoric of raising taxes on the rich and making them pay their “fair share”. The war on the middle class is only beginning.
In Europe, leaders of European Union countries such as Germany and France continue to battle among themselves. The ever-present problem of a debt-crippled Greece hangs over their heads, and they are struggling to come up with a bailout loan package to rescue Greece. The EU developments may not affect the U.S. for much longer, as analysts are saying, but it does not help the overall health of the global economy or that of the U.S.
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