Penn State researchers measure PA impact of 'fiscal cliff'

Written by Craig Layne and Radio Pennsylvania | Dec 6, 2012 4:01 AM

(University Park) -- Penn State researchers have crunched the numbers on how Pennsylvania would be impacted if the country goes over the so-called "fiscal cliff."

The university's Institute for Research in Training and Development have looked at what would happen if the mandated $1.2 trillion in federal spending cuts over ten years were allowed to happen beginning next month.

Institute Director David Passmore says the state stands to lose 47,000 jobs from the cuts.

"This is enough to push us into about a 2 percent higher unemployment rate," Passmore says. "The reduction in economic activity is enough to change our about 2 percent growth rate in our economy down to a flat growth rate. In other words, if sequestration happens, we have the recipe, probably, for another tough recession."

Pennsylvania's most recent unemployment rate is 8.1 percent.

Passmore says the "fiscal cliff" would cut government demand and could cost the state $5.8 billion in total economic output.

Penn State's study was first published in Pennsylvania Business Central.

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