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And when fiscal stimulus measures expired, like the tax credit for first-time homebuyers, the housing market sagged.
Unfortunately, as austerity was ending at state and local governments, it went into overdrive at the federal level: a payroll-tax cut and other stimulus measures expired, while Barack Obama and Republicans in Congress agreed, after a bout of acrimonious and disruptive brinkmanship, to swingeing tax increases and spending cuts.
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Those measures expire on Dec. 31 in all the E.U. nations where they remain, including Britain.
Before each of these measures expires, Congress will have to decide whether to extend the policy into the future.
However, fiscal policy is likely to tighten as several fiscal measures expire, knocking some 2% off GDP from January onwards.
Those measures expire at the end of the month, and negotiations to extend them have been at a near-impasse between Democrats and Republicans in Congress.
Indeed, they are bound to worsen if Congress approves deep near-term spending cuts as part of a debt-limit deal while letting relief and recovery measures expire.
Politicians are racing against a year-end deadline when Mr Bush's tax cuts and other stimulus measures expire and automatic spending cuts are triggered.
Although both parties seem prepared to let the stimulus measures expire, neither party wants all the Bush tax cuts to end, or the sequester to take effect.
The break is scheduled to expire in six months, but no one will hazard a guess about its fate because it is just one of many tax and spending measures expiring at the same time.
Even if politicians come up with a way to delay this "fiscal cliff", the economy will still feel the drag of tighter fiscal policy as previous stimulus measures expire and planned austerity measures take effect.Both Republicans and Democrats agree that the cliff must be avoided.
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