Will the US fall off a fiscal cliff in 2013?

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The year started off well for US investors as its major stock markets hit fresh highs in the first half.

The S&P 500 recovered from lows of around 1,200 at the start of the year to over 1,400 by April as investors were encouraged by positive economic jobs and consumer sentiment data and Federal Reserve President Ben Bernanke’s third round of quantitative easing. However, as November’s Presidential election drew closer, fresh uncertainty and the prospect of the fiscal cliff issue ($600bn of Bush-era enacted tax rises and spending cuts that come into force next year) weighed on investor sentiment, as analysts expected the issue to shave up to 4% off GDP levels in 2013. Markets have swung b...

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