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By Jason Stipp and Robert Johnson, CFA | 12-21-2012 02:00 PM

Will 'Cliff' Woes Completely Derail the Economy?

Morningstar's Bob Johnson sizes up how a stronger-than-expected economy may fare in different 'fiscal cliff' scenarios.

Jason Stipp: I'm Jason Stipp for Morningstar. Recent data indicates that the economy is doing better than most people expected recently, but the fiscal cliff headlines still loom and the market is still upset about all the negotiations in Washington.

So will the fiscal cliff debate throw off what is a stronger economy today? To give his insights is Morningstar's Bob Johnson.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: So you don't want this to get lost. We got data this week that shows the economy was stronger than just about everyone expected in recent times, but the fiscal cliff headlines are still dominating, still upsetting the market. Let's talk about some of the things that looked better than they looked before. We already talked about housing this week and we know that that market is still doing well, but we got some more data this week; the GDP third revision was a lot higher than everyone thought it was going be.

Johnson: Yeah, it came up over 3%, 3.1% in terms of GDP growth, and it was a nice [reading] across, many categories did better, a couple consumption categories, imports, exports all looked better. So I really liked that that number was over 3%. That's one of the best numbers of the recovery by the way, and I think everybody was very fearful.

The bad thing about the 3.1% is that it means the fourth quarter is going to be a tougher comparison. That's the bad news.

Stipp: Do you think that it will be a tougher comparison that we will come down from that 3.1%?

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