WASHINGTON, DC (AP) - Federal Reserve Chairman Ben Bernanke weighed in on the impact of the U.S. edging closer to the fiscal cliff.
'Clearly, the fiscal cliff is having effects on the economy,' the uncertainty affecting consumer and business confidence and leading businesses to cut back on investment, he said.
New reports on the economy are due out Thursday morning.
Americans went into this holiday shopping season feeling good about the economy and ready to spend. Consumer confidence surveys from Labor Day to Thanksgiving hit five-year highs, but as people hear their taxes could go up a lot next year, confidence is fading. Some people say they might spend less now.
Small business confidence hit a four-year low this week and big companies are spending less on equipment and software now. Consumer spending accounts for two-thirds of the economy and some companies want to cut back before their customers do.
There is increasing concern about a Dec. 31 deadline to stop the expiration of Bush-era tax cuts and the start of across-the-board spending cuts that are the result of Washington's failure to complete a deficit-reduction deal last year. Even if an agreement can be reached, the halting pace of negotiations is jeopardizing chances that it could be written into proper legislative form and passed through both House and Senate before the new Congress convenes on Jan. 3.
House Speaker John Boehner said Wednesday he and President Barack Obama still have 'serious differences.'