NEW YORK (Reuters) - The “fiscal cliff” could trigger a recession and push the unemployment rate above 10 percent, ratings agency Fitch said on Monday.
Fitch said it did not expect Congress to allow the tax hikes and spending cuts, which have been dubbed the fiscal cliff, to take place, given the “far-reaching effects.”
The projected rise in the unemployment rate to exceed 10 percent compares with a 7.9 percent jobless rate in October.
The fiscal cliff would “dramatically affect demand” for transportation assets, Fitch said.
In such an event, the agency said it expected the impact on airport traffic volume to range from flat to a 5 percent decline from current levels, and traffic volume on road, tunnel and bridge facilities to see smaller declines than they did in the 2008-2009 recession.
Fitch said transportation levels would fall because demand tends to rise and fall with gross domestic product and unemployment levels. It also said various types of airports would be hit differently. Airports near leisure destinations would fare worse in a second recession.
Fitch forecast that with the fiscal cliff, import volumes would fall along with a decline in consumer confidence and spending, though not as far as in 2008-2009.
Reporting by Gabriel Debenedetti; Editing by Chizu Nomiyama and Kenneth Barry