The phrase "fiscal cliff" has been as ubiquitous in discussions about the U.S. economy as political attack ads were during election season.
Many real estate investors in South Florida are in a holding pattern until the president and Congress determine a strategy for the looming cliff of federal budget cuts and tax increases scheduled to take effect in January. But one economist says the national economy is facing an even more perilous "cliff" at the end of 2013.
The expiration of "Operation Twist" at the end of 2013 will serve as a "monetary cliff" for the real estate market and broader economy, says economist Asieh Mansour. The head of Americas research for CBRE last Friday addressed real estate professionals and invited guests at the Loews Hotel in Miami Beach during the real estate firm's "Market Forecast Outlook 2013" event.
The Federal Reserve in late 2011 launched "Operation Twist," an initiative to gobble up longer-term Treasury bonds and sell off bonds closer to maturity in an effort to keep interest rates low. Mansour, who predicted the U.S. economy next year would grow at a rate similar to 2012, said the operation's scheduled end could be disastrous without further action from the Fed.
"The only policy lever we have is monetary policy," said Mansour, who joked that her friends in the industry often accuse her of being "dour" with her economic prognostications.
By early 2014, we'll know if Mansour was being overly gloomy or prescient with her forecast.