Recently released figures have resulted in mixed interpretations among economists about the 2013 economic outlook. Some say the economy is on pace to achieve a modest recovery pointing to better than expected housing figures, and a relatively low amount of first time unemployment claims during the holiday season.

However, while those predicting gains in 2013 feel that these figures indicate better economic times in 2013, the fiscal cliff fiasco gives just about every prediction a fatal caveat.

If a deal is not reached by the end of the year, there will be no shortage of blame being passed around D.C. when the economy ultimately dives. President Obama will doubtless seek to shed responsibility and pass the buck off to Republicans for the looming fiscal cliff failure, along with blame for what will likely be a poor economy in the first year of his second term. The only problem with this strategy is that even if a fiscal cliff deal is reached, the economic outlook for 2013 remains seriously troubling.

USA Today reported that first time jobless claims this week fell to their lowest levels since March of 2008. On its face, this figure seems encouraging but in reality, it is little more than a prediction thanks to widespread office closings during the Christmas holiday.

A department spokesman said many state unemployment offices were closed Monday and Tuesday and unable to compile complete data. Fourteen states provided estimates and the department estimated the numbers for five more states.

The government might estimate one or two states in a typical week, but 19 state estimates are unusually high.

Moreover, consumer confidence and spending levels are not commensurate with what one would expect when unemployment is supposedly dropping.

Consumers are starting to worry about higher taxes. A measure of consumer confidence fell to a five-month low this month, a survey released Friday found. And reports show the holiday shopping season was the weakest since 2008, when the country was in a deep recession.

Of course, while the “unemployment rate” as it is calculated by the Bureau of Labor Statistics did in fact drop from 7.9 to 7.7 last month, that change was almost exclusively due to the fact that work force participation tumbled and created an artificial drop.

The percentage of working-age Americans who are either employed or actively in search of a job was reported as 63.6 percent for November 2012, two percentage points lower than the previous month and the worst the country has seen since 1978.

Perhaps even more troubling than the workforce participation is the drying up of investment capital over the last three years. John Hewitt, CEO of Liberty Tax Service recently weighed in on the issue when asked whether he believed the economy was poised to make a turnaround in 2013.

I don’t… I’ve been in franchising for 43 years. For the first time ever in the last 3 years — in ’09,’10, ’11 — there were less franchise units in this location of all kinds. Of McDonalds, of Subways, of Dunkin’ Donuts, of Liberty Taxes, there are less franchise units of all kinds than each of the preceding year. That’s happening because the funding, the financing for franchising, is drying up.

Small businesses are suffering from primarily — not so much the recession, which is harmful — but just the lack of funding for small businesses in general.

Essentially, what we have sitting before us are a combination of factors which indicate serious problems ahead. High “real unemployment,” a historically low workforce participation rate, low consumer confidence accompanied by low consumer spending, and the sustained evaporation of investment capital.

The fiscal cliff is yet another support beam of the economy that is about to buckle. President Obama can blame economic troubles in 2013 on Republicans and fiscal cliff negotiations if he’d like, but the truth is that the aforementioned factors indicate that the economy has, in large part, already been dialed in.

What the fiscal cliff does offer President Obama and Congressional Democrats is a convenient scapegoat for an economy that is already teetering on the brink.

 
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