Bank of America Merrill Lynch - "We expect the full spending sequester to kick in on March 1, with most of the cuts sticking.
How Big?
(...) The sequester cuts $1.2 trillion of budget authority over a 9-year period (2013- 1). Netting out about $200bn in savings from lower interest payments, that works out to about $109bn in reduced budget authority per year.
How Painful?
(...) The shock to GDP growth will be equally noticeable. The CBO estimates a -0.5% impact on 2013 GDP. Macroeconomic Advisors (MA) recently ran the cuts through their model and estimated that the sequester would cut growth over the four quarters of this year by 0.5%, 1.3%, 0.6% and 0.1%, respectively. This is very close to what we have been assuming all along. If anything, the near-term shock could be slightly bigger than the CBO and MA exercises because they do not include the extra cuts needed to offset overspending in the first half of the fiscal year. We expect a negative shock to GDP growth over this year of 0.4%, 1.5%, 0.7% and 0.2% respectively."