While lawmakers, including President Barack Obama, have recently expressed optimism over the possibility that a deal to avert the cliff could be reached before Christmas, major industries like construction are still gearing up for a number of potential “what if” scenarios.
The fiscal cliff, which refers to the combination of spending cuts and tax increases that are slated to take effect at the start of the new year, by many accounts, could have a devastating effect on the U.S. economy, particularly as it continues to show signs of gradual recovery from the recent recession.
According to the Engineering News-Record, tumbling off the fiscal cliff could have dire consequences for the construction industry, which only now appears to be finding firmer ground to stand on. The media outlet refers to the potential consequences as “three strong punches,” including higher taxes for small businesses, reduced infrastructure spending and a downturn in the economy, which would once again limit the number of new construction projects.
Construction Officials Uncertain
As lawmakers continue to debate how to avoid the fiscal cliff, it’s clear that uncertainty is not a good thing for anyone in the construction sector. Forecasts that are predicting a rise in both residential and commercial construction in 2013 could be all for naught if the fiscal cliff issue is not resolved by the end of the year.
Jeffery Potter, president of the American Institute of Architects (AIA), wrote in a recent leader to President Obama and Congressional lawmakers that a failure to avert the crisis would be a major disaster for the construction and design sectors, DesignBuild Source reports.
“Although there are signs of improvement [in construction conditions], failure to act on the fiscal cliff would bring that progress to a complete stop,” Potter wrote in the letter. “An AIA analysis released in October showed that the budget sequester scheduled to take place in January would reduce federal investments in design and construction by more than $2 billion, with a potential job loss of an additional 60,000 workers across the design and construction industry.”