- by cnn
- 01 Oct 2023
As leaders in Washington fail to make progress on a debt ceiling deal, Moody's Analytics is warning of disastrous implications for American jobs if the United States defaults on its debt for an extended period.
Treasury Secretary Janet Yellen has forecast that the United States could run out of cash and extraordinary measures to pay its bills as soon as early June if Congress does not act.
While most states would be "hit hard" by a debt limit breach, the economic pain would vary from state to state, according to projections released on Wednesday by Moody's. It would disproportionately hurt states with large concentrations of federal workers or that have a number of jobs that rely on government funding. That includes Washington, DC, and states located near or that rely on federal institutions such as national labs or military bases such as Alaska, Hawaii and New Mexico.
Florida, Ohio and Pennsylvania would also likely lose hundreds of thousands of jobs apiece if there is a breach of the debt ceiling lasting several months, the economic research group found.
The analysis spells out other widespread damage: The unemployment rate would spike to near-double digits in the District of Columbia (8.9%), California (8.7%) and Ohio (9.5%). Michigan's unemployment rate would reach 10.8%, up from 4.1% today.
Other states that would feel significant impact are ones that rely on federal spending and aerospace, such as Virginia, Connecticut, Kansas and Washington.
Moody's said tourism-dependent states including Arizona, Florida and Nevada will eventually experience "sharp" job loss as well those that rely on auto manufacturing, like Michigan and South Carolina.
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