The government shutdown was hard on the economy as a whole, but some states took a bigger hit from Congress’s spending bill and debt ceiling standoff over Obamacare. According to Stateline, a study done by Moody’s Analytics placed six states in positions with the highest difficulty.
According to the managing director of Moody’s, Steven G. Cochrane, the U.S.’s economy will probably be back on track by 2014 due to the bipartisan deal from Congress that reopened the government. Until then, New Mexico, Alabama, Washington D.C., Maryland, Virginia, and West Virginia are feeling a little rough.
1. New Mexico
New Mexico’s higher number of research institutions and military bases with civilian employees is one reason that the state is being hit so hard, with an economic drop of 0.63 percentage points. According to Statline, the effects of military base concentration in New Mexico were somewhat gentler because civilian defense workers were put back to work after only a week of the shutdown. “But some spending on services cannot be made up, and the muliplier impacts from federal contractors shutting down will be more pernicious,” said Cochrane.
For reasons much the same as New Mexico, Alabama has been hit with a fall in percentage points of 0.55 in the fourth quarter. Luckily for the U.S. state, it also benefited from early return of the furloughed defense-linked employees.
3. Washington, D.C.
While not a state per se, Washington D.C. was one of the hardest hit in the country. Washington’s economy is looking at a potential 5.59 percentage point drop in the fourth quarter. Cochrane suggests that this is due to federal agencies that are gathered in the state for reasons related to natural resources and land management.
4. Maryland, Virginia, West Virginia
In the same region as Washington, Maryland, Virginia, and West Virginia are unsurprising additions to the list. The Gross Domestic Product of Maryland could fall as much as 1.11 percentage points, Virginia’s as much as 0.73, and West Virginia’s 0.64 percentage points in the fourth quarter, surpassing the damage done to even states such as Georgia, Idaho, California, and New York.
Looking to the future, things are not entirely on the upswing though. “The next question is how much uncertainty from the new deadlines lead to a broader slowdown in the economy. Given the statements from the congressional leadership and probably the fatigue in Congress of just going through this, they will find ways to breeze through those January and February deadlines without creating any issues. I don’t think anyone wants to relive the events of the past three weeks so soon again,” said Cochrane of Moody’s.