A last-minute deal will keep the U.S. from driving off the so-called fiscal cliff, but higher taxes and continued political fighting in Washington threaten to shake the fragile economy well into 2013.
A bill passed by Congress late Tuesday averts widespread tax increases and delays deep spending cuts that had threatened to return the country to recession. World stocks went up in response.
Many economists were disappointed that Congress and the White House couldn't reach agreement on a broader deal to significantly reduce the deficit over the next 10 years. That could have boosted business and consumer confidence and accelerated growth.
"Nothing really has been fixed," said Joseph LaVorgna, an economist at Deutsche Bank. "There are much bigger philosophical issues that we aren't even addressing yet."
Lawmakers postponed tough d