Increase in spending possible after federal workers return to work
LAS CRUCES, N.M. — Hundreds of thousands of federal employees returned to work Thursday after a deal to reopen the government was reached Wednesday night.
Economics experts Chris Erickson at New Mexico State University said there could be a boost to the local economy at least short-term.
"It's the sort of thing where people hunker down, they're not going to spend but once it's over they'll go and spend that much more," Erickson said.
He said now they're going to go out and buy groceries plus enough for the next week and also gas up the car along with other discretionary spending.
As a part of the deal reached in congress, the estimated 800,000 federal furloughed employees will receive back pay.
Erickson said because of that, the impact of the shutdown will be virtually none.
"I think that back pay is going to insure that there will be very minimal impact for the local economy," Erickson said.
The shutdown did furlough about 2700 employees at White Sands Missile Range but fortunately for the local economy they were able to return to work after four days.
If a deal hadn't been reached, thousands of employees at Sandia and Los Alamos national labs could've been furloughed causing major problems for the state.
"If that would have happened, it would have thrown New Mexico into a recession no doubt question it," Erickson said.
While the damage could have been worse, globally the shutdown altered the nation's perception as it came within hours of defaulting on it's debt.
The U.S. dollar is reserve currency for other countries paying international debts and could lose that status with the continuing instability with the government.
"The continuing problems in Washington D.C. are not good for us status overseas it makes us look like three stooges," Erickson said.
The deal will fund the government up to the the start of next year allowing for borrowing into February.
Erickson said with the possibility of another shutdown, holiday shopping could see an impact with consumers possibly concerned about their next paychecks at the start of the year.