Until the past week, stock market prices reflected confidence in a deal being reached over the fiscal cliff, said Jeff Korzenik, chief investment strategist for Fifth Third Bancorp.

Markets started acting more nervous as negotiations keep getting closer to the 11th hour. The biggest risk of a deal or no deal is the threat of the economy going back into recession.

What’s making the market skittish are estimates for 0.5 percent negative growth in U.S. Gross Domestic Product from the fourth quarter 2012 to the end of 2013, according to the Congressional Budget Office. Fidelity Investments predicts a 20 percent or more decline in corporate earnings in a worst-case scenario.

“As there’s growing fears there will be no resolution or some of the potential resolutions will be less favorable to the short-term economy, we see the market selling off,” Korzenik said, meaning stock prices have been trending lower. “We still think we’ll avoid it, but if we were to go off the cliff the main impact would be going back into a recession.”

How the market reacts to what happens going forward depends on expectations about the future. The market doesn’t like uncertainty, said Jim Russell, senior equity strategist for U.S. Bank Wealth Management.

“The market’s going to trade lower every day until this gets solved,” Russell said.

Even with no deal in hand Tuesday, the impact on the broader economy will not be immediate. And Korzenik said even if no agreement is reached over federal tax rates and spending programs, the economy won’t be hurt to the same extent it was in the recent economic recession, from the end of 2007 to 2009. The type of recession caused by the fiscal cliff would be shorter lived, Korzenik said.

“We still believe we’ll see a resolution. Tuesday is a little less than a drop dead date than it’s sometimes portrayed. We’ll still have a two-week window after that without doing major damage to the economy,” he said.

One of the real problems is what the back and forth does for perceptions investors have of the U.S. Poor fiscal discipline over the long run of five years or more risks the U.S. dollar’s status as the world’s reserve currency.

“I think this sort of dysfunctional process for solving basic government budgeting is a poor reflection on the U.S. and ultimately will dissuade investors from the U.S.,” Korzenik said. “We’re playing with fire and we’re undermining decades of goodwill and confidence built up among international investors.”

Read more about those in jeopardy in Ohio:

Fiscal cliff effect on local:   Agriculture  |  Health care  |  National security  | Local/state governments  |  Jobless benefits  |  Financial markets  |  K-12 education  | Colleges and universities

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               What exactly is the fiscal cliff?