” “Messy politics,” as demonstrated in the last-minute dodging of the fiscal cliff, will drive the economy in 2013, predicts Mohamed El-Erian, CEO and co-chief investment officer of PIMCO, in an article run for Project Syndicate.
Unless Congress becomes more cooperative, political polarization will fuel uncertainty, make budget talks more difficult and hamper economic growth, El-Erian says.
“From stymieing medium-term fiscal reforms to delaying needed overhauls of the labor and housing markets,” he states, “congressional dysfunction would keep U.S. economic performance below its capacity; over time, it would also eat away at potential output.” ”
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