GRAND RAPIDS, Mich. — Time is running out for leaders in Washington to strike a deal on paying the nation's debts.
As the U.S. inches closer to a potential default, a new report out from Moody's Analytics labeled Michigan as one of the states facing the biggest hits should the standoff continue and its effects start to seep into the rest of the country in the coming months and years.
"By the time we get to 2024, our projection is that that becomes really sort of a self-sustaining recession that continues into the second half of next year," said Adam Kamins, a senior regional economist for Moody's Analytics. "And at that point, a state like Michigan, which traditionally is among the most cyclical in the country, gets hit extremely hard."
In the event of a drawn out default, the report estimates more than 200,000 jobs could be stripped from the state's workers. Kamins, who co-authored the report, said it's due in large part to the state's reliance on the automotive industry.
"It always comes back to auto manufacturing when we're think about kind of why Michigan could be worse off than the rest of the U.S.," Kamins said. "So, if interest rates rise, confidence dries up, we see reduced purchases of big ticket items, including cars. And that is enough that even if the U.S. kind of flatlines, it probably is enough to tip Michigan into a mild recession, but a recession nonetheless."
According to Dr. Dan Giedeman, an economics professor at Grand Valley State University, the blow to one of the state's biggest industries could trickle down and impact other major employers, costing jobs in a number of areas.
"If I'm a worker doing something in the automotive industry, and I lose my job, I'm not going to be going out to a restaurant," Giedeman said. "I'm not going to be buying new clothes for my kids as often. And so, that's why it spills over so much to other businesses."
Even if a last minute deal is reached, experts said it could lower confidence in America's ability to pay its debts and send the economy tumbling.
It's why they said it's key that Michiganders and Americans keep a close eye on whatever happens next.
"I do think it is important for people just to keep an eye on what's happening with sort of the negotiations, kind of finding out what's happening politically in terms of, 'Are they getting close to a deal? Are they getting not close to it? Are we going to breach that that debt ceiling?' and realize that things could not go very well, relatively quickly," Giedeman said.
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