If Washington can strike a bargain on the 'fiscal cliff,' some tax hikes and spending cuts would slow the economy. But rising consumer confidence could keep the slow recovery chugging along.
Consider this a sign of hope: As the clock ticks toward Dec. 31 with no fiscal deal in place, the stock market is holding up pretty well.
Investors expect Congress and the White House will find a way to keep the economy from plunging headlong over that much-discussed "cliff" of tax hikes and automatic federal spending cuts at the end of the year.
Getting to congressional "yes" votes within the next 11 days isn't a sure thing, and stock prices could start struggling if the prospects for a deal come into doubt. The fact that the Republican House speaker has been pushing a "Plan B," and Democrats say they'll only consider a "Plan A," is hardly reassuring.
But for now, financial analysts and the markets appear focused squarely on a 2013 environment in which the fiscal cliff is avoided, and the economy stays out of recession.
What would that economy look like?
It would be one with scaled-back federal largess, but possibly enhanced consumer confidence.