Government Impasse Reaction

POSTED: 10:45 AM Dec 24 2013   UPDATED: 4:52 PM Oct 10 2013
Government Shutdown
Johnson City, Tenn. -

Just the mere mention of talks going on in Washington over the government's budget and shutdown has the stock market heading into positive territory.

But the results of the impasse between the two parties could have lasting effects.

A local economist talks about the lasting effects of the budget struggle.

The signs of the government shutdown are still up, the ongoing press conference debates continue. But for the American people one word continues to be heard -- uncertainty.

"Uncertainty right now is very high in this country. Confidence will be effected and that in itself can have a poisonous effect on economic activity above and beyond the slowdown or shutdown of our government functions," ETSU economics professor Steb Hibble says.

Hipple believes the congressional issues need to be settled quickly before more harm is done to an already-struggling economy. "The longer this goes on, the more this is taking out of the economy and the economy is not that strong coming back from the Great Recession. We've have a partial recovery but we're still a very long way from getting back to full employment," he said.

Hipple says even if there is an agreement reached, the effects will be long-lasting. "Once the government re-opens, those paychecks will begin and purchasing will be back in the economy. But the point is, once you lose production due to a shutdown or recession you can never regain it. It's a permanent loss," he said.

He feels that saying the government will be in default if something isn't done about increasing the debt limit may be too strong a word. "The federal government could continue to have its different programs and fund those programs at a level that is covered by tax revenues," he said.

But in order to do that, there needs to be some sort of budget resolution, which is not in place.