Signs point to faster recovery if ‘cliff’ is avoided

Associated Press

WASHINGTON

Fresh signs of a strengthening U.S. economy Friday suggested that if Congress and the White House can avert the “fiscal cliff,” the economic recovery finally might accelerate in 2013.

Consumers spent and earned more in November. And for a second- straight month, U.S. companies increased their orders for a category of manufactured goods that reflects investment plans.

In light of the latest figures, some analysts said the economy could end up growing faster in the current October-December quarter — and next year — than they previously thought.

“I see momentum building,” said Joel Naroff, chief economist at Naroff Economic Advisors. “If Washington makes the moves it needs to make, then the economy should pick up speed next year.”

That’s a big “if.” House Republicans called off a vote on tax rates and left budget talks in disarray 10 days before the package of tax increases and spending cuts known as the fiscal cliff would take effect.

Also, confidence among U.S. consumers has sunk to its lowest point since July, according to a monthly index.

The University of Michigan says its consumer-sentiment index for December fell to 72.9, a sharp drop from the November reading of 82.7. The November figure was a five-year high.

Peter Newland, an economist at Barclays, says consumer confidence has dropped because of uncertainty over whether Congress and the Obama administration will reach a budget deal to avert sharp tax increases and government spending cuts set to take effect in January.