Caution: Fiscal Cliff Ahead

President Obama was re-elected to a second term yesterday. Obama won the victory with 303 electoral votes.

What will the next four years look like? What will a 2016 America look like? To many of us, it is a very negative thought. We know that in January, a combined $500+ billion in spending cuts and tax increases could begin.

Please read a Wall Street Journal statement below:

“Mr. Obama, whose relationship with business deteriorated over his first term, will face daunting economic decisions almost immediately. That is because the most pressing economic issue after the election is the so-called American fiscal cliff, a combined $500 billion in spending cuts and tax increases that begin in January unless Congress and President Obama cut a deal to delay or replace them before then. The White House and congressional leaders postponed negotiations until after the election, waiting to see which party emerged with more leverage.”

This scenario could be detrimental to an already choking economy. If there is not a deal reached that would stop the spending cuts and tax increases from coming, we could possibly see a market panic towards the end of this year.

[column size=”1-2″ last=”0″ style=”1″] The Fed is also a factor to consider in this decision. We know that the Romney campaign was not fond of QE3 and stimulus but with Obama it is a different story.

With Barack Obama remaining President, the Fed may have an easier time moving forward with their current monetary policy.

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