The Pennsylvania economy could experience serious fallout if Congress and President Barack Obama fail to come up with a budget agreement before the end of the year.
A deal must be reached to avoid the so-called “fiscal cliff,” automatic reductions totaling $1.3 trillion across the federal government.
David Passmore of Penn State’s Institute for Research in Training & Development conducted the analysis, originally published in Pennsylvania Business Central, and says he expects the phased budget cuts could cost Pennsylvania 47,000 jobs and $5.8 billion in economic output over the next decade.
“Back of the envelope estimates that we have really point to a couple of big areas,” Passmore said. “More immediately, in the first year, we’re going to see [impacts on] health-care sectors especially and also retail.”
Throughout the country, defense contractors will see a reduction in orders.
Passmore says the numbers on the local level illustrate the high stakes of the ongoing negotiations in Washington.