Is the Sequester really a bad thing?

So the big day has finally arrived.  Not quite as much fanfare as Y2K or the Mayan Calendar, but we’ve been hearing about the fiscal cliff  wrangling for almost a year, and how severe the impacts will be.  The Columbian ran an article this morning on the local impact of Sequester cuts  While there are clearly challenges in the offing, most of the local agencies sound like they expect to find ways to deal with this, many are taking a wait and see attitude before they determine how cuts will take place.

Congress responded to the big day by leaving town.  The rest of the country seems to be taking it in stride.  The stock market has been on a steady climb. Consumers are more confident.  An AP article, A Sturdier Economy,  discusses the idea that these cuts are fairly minimal, about 1% of this years budget, and most come from discretionary programs and many will be delayed over the course of several months.

The article also references the idea that yes, there will be an impact on GDP, reducing it from 2.6 per cent growth down to 2.0, and keep unemployment around 7.4 per cent. Some economists estimate that if the battle lasts only a couple months the impact may be less than  .1 per cent. Coupled with  the outlook into 2014  for growth rates to kick up to 3.4 per cent, Americans are doing what they do best.  Working hard at their jobs, raising their families, putting effort into improving their communities, and leaving the dysfuntional DC drama to play itself out.

Last month Forbes ran an opinion piece that states Mr Boehner has put President Obama into a very tight box and we may have already made significant progress toward getting out financial house back in order.  That might be the most significant component in this entire scenario, because if business, investors and consumers have growing confidence, they’ll help drive the economy forward.

I expect a compromise in three to four weeks.  What are your thoughts?


Jim West is a Commercial Realtor in Vancouver Washington. His specialty is helping local companies Stop Leasing! and Own their business property. He also works as a Tenant Representative - assisting companies to locate and negotiate a successful Lease for their business operations. He has a public workshop series called Commercial Property Success Series.

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