"Searches for 'fiscal cliff' have more than doubled in the past 90 days in the U.S. and in Canada searches have increased three-fold," says Brindle. The 'fiscal cliff' -- a term coined by U.S. Federal Reserve chairman Ben Bernanke -- is used to describe the steep government spending cuts and tax increases (US $800 billion) due to be implemented in early 2013. On a positive note it may cut the federal budget deficit, but economists also warn it could tip the economy back into a recession.
What does this mean for you?
A contraction in the American economy could drag down the Canadian economy. Sherry Cooper, chief economist at Bank of Montreal Financial Group, says that in Canada this would cause unemployment rates to rise, international economies would fall into a recession, and also lead to a big sell-off in the stock market.