J.P. Morgan Cuts GDP Forecast on Increased Likelihood of Sequester

From Real Time Economics:

As government cuts are looking more likely, economists are baking them into their forecasts for 2013.

Economists at J.P. Morgan thought the US would avoid the federal spending cuts known as sequestration. But now they admit that thinking is “increasingly hard to square with the political realities.”

As a result, they lowered their 2013 GDP forecast to just 1.9% (on a 4Q/4Q basis) from 2.1%, with more of the drag happening in second half. J.P. Morgan expects the unemployment rate to stand at a still-high 7.6% in the fourth quarter of 2013.