That means tax rates will have gone up, and then Obama will be in a position, when he wants to cut tax rates, and Republicans want to cut tax rates, and its argued that he will then be in a better position to reach an agreement…I don’t have a lot of faith in this “we’ll cause a lot of pain to the politicians so they’ll do the right thing”.
In terms of the effects on economic activity, it is also necessary to monitor developments in the CPI (all items less imputed rent), which – as I mentioned earlier – reflects household consumption expenditures and is used to deflate such figures as wages.