20 Aug 2014
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How Will the Fiscal Cliff Affect Local Businesses?

Some reports claim a $200 billion decrease in consumer spending in 2013.

How Will the Fiscal Cliff Affect Local Businesses?

The wide-ranging effects of the United States going over the fiscal cliff—tax increases, defense cuts, food inspection and air travel safety cuts—have set not only many consumers, but some business owners on edge.

Why? The White House's Council of Economic Advisors estimated that tax increases would decrease consumer spending by nearly $200 billion in 2013.

In fact, numerous media outlets are reporting that fears over the fiscal cliff are partially responsible for slowed 2012 holiday sales.

The Pittsburgh Post Gazette cited information from MasterCard Advisors SpendingPulse (which tracks total U.S. sales at stores and online) that media coverage of the fiscal cliff and Hurricane Sandy "created this negative trend in consumer confidence and spending."

In a BBC business news article, a North Carolina ski resort general manager said he worried that consumers' fears over the uncertain financial picture could "threaten plans for leisure activities, like skiing" and may affect the resort's ability to invest in its business via a new ski trail and increased snow-making capabilities.

Locally, at least one long-standing business does not appear to be alarmed about the impending cliff.

Danny Gurewitz, president of Silver Spring's Parkway Deli, which opened in 1960, said the restaurant has weathered many a recession.

"We're lucky that we have such great and loyal customers, so we don't worry," Gurewitz remarked.

In November, the Huffington Post reported that more than 600 small businesses sent letters to Congress "urging them to end the Bush-era tax cuts for the wealthy under any deal brokered to avert the so-called 'fiscal cliff.'"

A recent NBC News item detailed some of the potential effects on small businesses, citing statistics from the National Federation of Independent Businesses that reveal that only five percent of small businesses plan to add new jobs and only 19 percent plan to invest in new equipment.

Are you a small business owner? How are you dealing with the threat of the fiscal cliff? Tell us in comments.

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