The U.S. economy is in poor shape, with higher-than-desirable unemployment rates and lower-than-desired GDP growth rates. Meanwhile, federal expenses continue to exceed revenues (primarily taxes). While the size of the national debt may be worrisome, it is currently not a major crisis. Historically low interest rates have mitigated the interest rate burden, but an unpredictable (and entirely possible) event could lead to a sudden interest-rate spike that would create another economic crisis.

On Jan. 1, 2013, the Bush era tax cuts are scheduled to end, and tax rates will return to what they were before those cuts were put in place. Moreover, mandated cuts in federal spending would go into effect. While the combination of higher revenues and lower government expenses would effectively raise revenues and reduce the growth rate of the national debt, the worry is that higher tax rates would encourage businesses to shed workers, raising the unemployment rate and pushing the U.S. economy back into recession. Despite the political jockeying for position currently going on in Washington, virtually no one wants to go over the fiscal cliff. Predictive analytics may help.