The Bipartisan Policy centre — an independent group with a long track record of accurate prognostication — has confirmed that they expect massive job losses across the board if Congress is unable to avert the sequester. The prediction isn’t without immediate evidence, either. The contraction in GDP last week was largely attributed to decrease in government funding allocated to manufacturing in the defence sector, which has seen a substantial cut as a result of the Budget Control Act of 2011 mandatory spending caps and the gradual end of overseas conflicts.
Here’s the key quote from the Bipartisan Policy centre emphasising how bad sequestration could be in the short term:
CBO estimated a decline of 0.7 per cent in 2013 gross domestic product (GDP) growth because of the ripple effect of the sequester cuts on smaller businesses and on government personnel. For an economy that already suffers from chronic unemployment and very slow expansion, the sequester could push the nation into sub-2 per cent GDP growth for 2013 and perhaps 2014. […]
Our estimate of approximately one million lost jobs due to sequester remains our base case if a full sequester occurs as scheduled on March 1.
As it stands, the ball is in Congress’ court when it comes to averting the across the board cuts.
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