Congress was able to avoid the fiscal cliff, but the government’s budgeting problems haven’t gone away.
Christopher McCarty, director of the Bureau of Economics and Business Research, said that Florida’s Consumer Confidence Index has remained the same since last year’s election, but the next few months will be important in determining whether it will increase or decrease.
“Right now, people are much like the economy,” McCarty said. “Sort of just treading water waiting to see what happens.”
According to McCarty, two important factors that have influenced confidence are the impending sequestration, which is set to expire on March 1, and the expiration of the payroll tax cut holiday, which for the last two years has lowered workers’ Social Security expenses by 2 percent.
The sequestration, a legal procedure that triggers automatic spending cuts, was pushed back in the hopes of avoiding the $2 trillion in cuts that would take place over the next 10 years. It must be compressed within the current budget year, McCarty said.
Florida could be especially affected because half of the cuts would come from the defense budget. With bases in Jacksonville, Tampa, Pensacola and across the state, those servicing the bases or living in cities around them will be affected, McCarthy said.
“There’s a lot of effects it will have, and so far it’s just been delayed until March 1,” McCarty said.