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Great expectations for US economy: Are Obama, Romney too optimistic?

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Politically, there's a strong reason for candidates to run on a platform of economic optimism. It helps Obama if voters believe that the economy is improving and will gain momentum. It helps Romney if voters believe that an economy with him in the White House will grow faster still.

The optimistic scenarios aren't necessarily impossible. But it's fair to attach some big asterisks to them. 

Romney himself notes that the economy hasn't been growing very fast lately.

"How about the growth of the economy? It's growing more slowly this year than last year, and more slowly last year than the year before," he said this month in the second presidential debate. 

What he didn't add is that next year's growth could be slower than this year's. That's what the Blue Chip survey currently projects. The average among forecasters calls for 2.1 percent GDP growth for 2012, and 2 percent next year. (If it pans out that way, Romney would prove to have been wrong on one count: Growth in 2012 would end up a bit stronger than in 2011. But Romney is correct that at present, this year has seen some cooling relative to last year.)

A major hurdle for the economy next year, seldom mentioned in campaign ads or speeches, is the "fiscal cliff" that's approaching at the end of the year. Come Jan. 1, a range of tax cuts are poised to expire, even as new restraints on federal spending kick in. To the degree that Congress and the White House fail to mitigate these changes, the result could be to suck several percentage points of GDP out of the economy. 

Economists widely agree that going "over the cliff" is a recipe for recession. Both parties say it's important not to let that happen. But the political compromises needed to achieve a benign outcome shouldn't be taken for granted, budget experts say. Even under some best-case scenarios for the economy, fiscal policy changes could create some downward drag on GDP growth. 

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