Impact on the Economy

08.03.11 (LAS CRUCES) -- The $2.4 trillion debt ceiling bill that threaten to bring the United States government into debt default has passed the Senate, but a local economist says there are bigger problems to worry about in the near future.

The unemployment rate remains high with about 14 million Americans out of work and another 11 million recently laid off or underemployed. Dr. Jim Peach is a professor at New Mexico State University and says the president and congress have plenty of work to do.

"We've lost at the peak of the recession about 8.2 million jobs and about 7.2 million now from the beginning of the recession in December of 07. At current rates it's going to take us until 2015 to get back to the number of jobs we've had in 2007. So, we may be looking at 8 or 10 years of essentially no job growth, but it is worse than that because employment growth from 2001 to 2007 was not great either," he said.

Dr. Peach is convinced government can fix unemployment. He says it would require a stimulus bill, much larger that the first one, and more structured on spending rather than tax cuts. Peach says the debt ceiling recently voted on will slightly reduce federal government expenditures having a bigger effect two or three years from now.

"Anytime there's a cut back in federal expenditures it's going to hurt, it's going to hurt at the local level, at the state level. I don't think the debt deal is a way to promote job growth," said Dr. Peach.

In New Mexico, the average worker paid about $4,000 in federal taxes and received an average of 13,000 from the federal government. Dr. Peach says there's no immediate sign of heading back into a recession.

"I'm more optimistic than most people. I think we'll have stronger growth in the second half of the year than we did in the second half. We have to fix education, we have to have an energy policy, we have to rebuilt infrastructure and we have to continue to spend a lot of money on research and development. Those are the things that made the economic growth possible since the end of World War II and we did all of those things very well for about fifty years. We've been falling on that for a while," he said.

Reported by Carlos Correa.

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[Turtlebomb11]

this guy know what he's talking about. I can't stress science, technology, and education enough in these times.

[mohamedelkassem1992]

first.comment.....why do we still need this government?