From the CBO:
Substantial changes to tax and spending policies are scheduled to take
effect in January 2013, significantly reducing the federal budget
deficit. According to CBO’s projections, if all of that fiscal
tightening occurs, real (inflation-adjusted) gross domestic product
(GDP) will drop by 0.5 percent in 2013 (as measured by the change from
the fourth quarter of 2012 to the fourth quarter of 2013)—reflecting a
decline in the first half of the year and renewed growth at a modest
pace later in the year. That contraction of the economy will cause
employment to decline and the unemployment rate to rise to 9.1 percent
in the fourth quarter of 2013. After next year, by the agency’s
estimates, economic growth will pick up, and the labor market will
strengthen, returning output to its potential level (reflecting a high
rate of use of labor and capital) and shrinking the unemployment rate to
5.5 percent by 2018.
