It's shaping up as another year of solid but not spectacular economic growth – more groundbreakings, more cars sold, more stores and restaurants opening, and a gradual decline in unemployment.

Unless, of course, everything falls off a cliff.

New Year's predictions about the economy in California and greater Sacramento are running into a deep dark void, courtesy of Congress and the White House. Until the "fiscal cliff" federal budget impasse is resolved, no one is really sure what 2013 will look like.

The fear: A couple of years' worth of recovery could evaporate if the worst-case scenario pans out and the economy is jolted by deep spending cuts and hefty tax increases.

Another recession could result. Consumers are already getting the jitters.

"Generally, the economic conditions for our market are improving, (but) Washington, D.C., seems to be the real big question mark," said Rick Niello, who operates a chain of upscale car dealerships in Sacramento. Uncertainty is already "causing some angst and some postponement of purchases," he said.

The prospect of another recession comes just as California and Sacramento are starting to get back on their feet. At 9.8 percent, unemployment is the lowest it's been in California and the Sacramento region since early 2009.

Sacramento's real estate market, so crucial to the area economy, is clearly picking up. After years of bleeding, the public sector will be fortified by the extra revenue generated by the tax increases approved by voters in November.

The improved climate is felt by developers such as Bay Miry, who expects to break ground this spring on the $48 million makeover of the 700 block of K Street in downtown Sacramento, one of the city's eyesores.

"I'm getting calls from more and more lenders," said Miry, who is planning a mix of retailing, night spots and apartments for the block. "I know that money is opening up. That's been a real tell-tale sign for me."

Not that the area economy is growing by leaps and bounds. Paul Bollinger of Inter-Cal Real Estate, which owns Loehmann's Plaza, Fountains at Roseville and other shopping centers, said he's tired of the "incremental progress" the region has seen.

"We're in year five of the economy struggling," Bollinger said. "It's well past time."

California's economic progress is a half-full, half-empty story. Employers across the state are expanding payrolls at a 1.9 percent annual rate – one of the best growth rates in the country.

On the other hand, the state's 9.8 percent unemployment rate is still third worst in the nation. California has recaptured barely 40 percent of the 1.4 million jobs it lost to the recession.

California's recovery hasn't spread uniformly. The coastal regions, particularly the tech-rich Bay Area, are doing far better than inland California. As measured by payrolls, Sacramento's job market didn't hit bottom until last January – more than a year after the statewide job picture began improving.

The tentative nature of the recovery shows up in many ways. Market researcher DataQuick says median home prices in Sacramento County have jumped a hefty 17 percent in the past year to $185,000 – but are still half what they were during the peak of the housing boom.

In commercial real estate, vacancy rates have been gradually improving. But nearly 12 percent of Sacramento's storefronts remain empty, according to Cassidy Turley Commercial Real Estate.

Sacramento's modest recovery speaks volumes about the region's continued reliance on construction and government. Both sectors are expected to make gains in 2013 but not huge improvements.

"In general, I think our outlook is one more year of this slow, sluggish recovery before things accelerate," said economist Jeff Michael of the University of the Pacific.

Michael predicts that Sacramento-area unemployment should fall to 9 percent by 2014, when he believes the job market will move into a higher gear.

One of the X factors is tax rates. Proposition 30, passed by voters in November, raises income taxes on wealthy Californians and sales tax on everyone. In addition, Sacramentans passed their own sales tax increase, bringing the rate in the city to 8.25 percent.

Higher taxes in general aren't good for business. But in a community like Sacramento – where the public sector accounts for more than a quarter of all jobs – the good likely will outweigh the bad. The extra billions from Proposition 30 will help school funding and shore up the state budget.

"You're looking at a millionaires' tax that's going to pass through Sacramento in the form of state spending," Michael said.

A much bigger impact, potentially, is the "fiscal cliff." In the absence of a deal, income tax rates will rise to pre-2001 levels and billions in automatic federal spending cuts will kick in, likely triggering a new recession.

The spending cuts could be the real crippler. Communities that rely heavily on federal spending, such as Navy-dependent San Diego, could be hurt severely.

The cliff is already hurting the business climate. More than a third of chief executives in the Bay Area – the fastest growing region in the state – have held off making investments in their businesses because of the uncertainty, according to a recent study by the Bay Area Council.

Many analysts believe the uncertainty helped tamp down retail sales during the holiday shopping season, as the news out of Washington got progressively worse in the days leading up to Christmas.

"People aren't sure if we're going to be in a recession next year – they don't want to take any chances," said Sung Won Sohn, an economist at California State University, Channel Islands.

About the only sure thing is that the solution to the fiscal cliff will be some blend of tax hikes and spending cuts. Even if a major crisis is averted, the remedy will take some money out of the economy.

"However that gets resolved, it's going to take a pinch out of growth," Michael said.

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