Arizona’s Economy Faces Major Impact if Our Planet Defaults, Warns Expert – Cronkite News

Economists predict that a prolonged national debt payment default would have a detrimental effect on Arizona’s travel and tourism industry, resulting in significant job losses and affecting all sectors. Arizona relies heavily on tourism and job loss is expected to be higher in this industry than any other. Arizona’s senior population could also be affected, with Social Security and Medicare payments being suspended if a default isn’t resolved. Arizona has a higher proportion of older people than the national rate, meaning many seniors could lose critical funds.

Analysts expect a record congestion at Phoenix Sky Harbor International Airport this Memorial Day weekend. Still, if a US default occurs next week, tourism will be severely affected, which is bad news for tourism-dependent states like Arizona, where the leisure and hospitality industry is forecast to employ a record 345,000 workers by March 2023. The Arizona Department of Tourism estimated that over 40 million visitors would spend over $20 billion in 2021.

Republicans are refusing to approve the debt ceiling cap without assurance that it will cut future federal spending, leading to talks to stall. President Joe Biden initially refused to negotiate a debt ceiling. But in recent weeks, his administration has given up, leading some to believe a deal is in reach. However, economists warn that even short-term breaches of debt payments could cause a deep recession, and it could take a long time for Arizona to recover.

Tiny Semiconductor Manufacturing Co. recently pledged to invest $40 billion in Arizona, offering potentially huge numbers of jobs associated with this private investment that depends on federal assistance programs. Some economists compare the potential situation to the 1991 film Thelma & Louise. Dennis Hoffman, an economist at Arizona State University’s WP Carey School of Business, said, “Unlike the asteroid, which is a random, unstoppable, unpredictable event, this…will be a concerted action by our Congress and government as one to drive that car into the Grand Canyon.”

However, economists believe that a default is unlikely, with an 85% chance that the US will not default. Even if a deal is reached after a few weeks of hiatus, analysts predict negative momentum could cause a deep recession. Arizona’s real estate sector is volatile, facing pressure from the recent Silicon Valley bank failure, which could be impacted if a default happens, with the Federal Reserve tightening lending options for homebuyers.

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