Valley economists mixed on possible debt ceiling fall out

As the Aug. 2 debt ceiling deadline approaches, Valley economists are having mixed feelings as to the exact impact the indecision could have on Arizona.

Valley economist Jim Rounds said that, should Republicans and Democrats be unable to agree to a deal, the impact on Arizona should be minimal.

"I don't think there is going to be some extreme budget cuts where people aren't going to get their military pay or they're not going to receive their social security checks," Rounds said. "But unfortunately, that is one of those scenarios. Low probability, but it is a scenario we have to talk about."

Rounds added that he believes pressure from Americans will force political leaders to come to an agreement prior to the deadline.

Arizona may be more susceptible than other states should the government be unable to write checks because of the state's dependence on a large military presence and ties to defense contractors, said Dennis Hoffman, an economist at the W.P. Carey School of Business at Arizona State University.

"That's been a very stable source of employment for [Arizona] historically," Hoffman said.

Hoffman believes that the government will continue to pay social security, military personnel and veterans, but payments would likely be delayed or disrupted in some manner.

A failure to reach an agreement could also send unemployment and interest rates through the roof, Hoffman said.

An disguised negative to the debt ceiling problem could come in gas prices. As the government struggles to pay out, gas prices could go down, but that would be bad for the nation in the long run, Hoffman said.