Obama cuts Hawaii vacation short to deal with fiscal cliff

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December 26, 2012, 5:45 am
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(NECN/NBC News: Danielle Leigh) - Fears over pending tax hikes and budget cuts have some sectors of the U.S. economy bracing for impact.

President Barack Obama returns to Washington Wednesday. Obama is cutting his Hawaii vacation short with less than a week to avert the fiscal cliff, and confidence in a grand bargain has all but disappeared.

There are three industries analysts say will suffer the most if Congress doesn't reach a deal to avoid the fiscal cliff.

Think necessities over luxuries. The fiscal cliff is expected to take the biggest bite out of the automotive, apparel and entertainment industries.

Americans are already taking a good-hard look at their wallets, as confidence the country will avoid the fiscal cliff diminishes.

"I don’t think grand bargain before the end of the year, there is hope that a deal will be cut," said CNBC Chief Washington Correspondent John Harwood.

If Congress doesn't extend expiring tax cuts in just days, middle income earners would owe Uncle Sam about $2,000 extra a year.

Market research firm IBIS-World predicts consumers will cut back in three main industries: automotive, apparel and entertainment.

"Once people decide to pull back on that, the effect is dramatic," said Marlene Colucci with the American Hotel and Lodging Association.

The National Retail Federation says retailers support one in four Americans jobs, and if the downward trend intensifies, those jobs would be at risk.

“If retailers stop creating jobs, the economy as a whole will probably stop creating jobs," says David French with the NRF.

For those industries, the wait is excruciating.

President Obama visited troops in Hawaii over Christmas, after a frustrating week on Capitol Hill left he and Speaker John Boehner a few hundred billion dollars apart on a deal.

“The President was about $200 billion higher on revenues, Speaker Boehner $200 billion higher on spending cuts," said N.Y. Senator Chuck Schumer on ‘NBC Meet the Press.’

On Sunday, lawmakers were mildly optimistic.

"If you get 80-percent of what you want, that's a pretty good day," said S.C. Senator Lindsey Graham on ‘NBC Meet the Press.’

There are tough decisions ahead with just six days left.

Tags: barack Obama, Republicans, tax increase , NBC News, john harwood, danielle leigh, fiscall cliff, spending cut
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