Norfolk economist weighs in on turmoil in Washington as potential government shutdown looms

Norfolk

NORFOLK, Va. (WAVY) – Lawmakers have until Friday to pass a bill to keep the government open. An economics professor with Old Dominion University spoke with 10 On Your Side about what this could mean for Hampton Roads.

Grim words from Professor Bob McNab.

“If you wanted to take two hammers to the U.S. economy and the Hampton Roads economy, this is the way to do it,” McNab said.

The first concern is the looming government shutdown. It will be triggered on Friday if Congress can’t pass a funding bill.

“About four out of every $10 in the Hampton Roads economy is touched by federal government directly or indirectly,” said McNab. “Fifty percent of that would likely stop in event of partial government shutdown, so we would not only see thousands of federal workers furloughed, we would also see them stop spending.”

McNab says a shutdown would not be ideal, as many people will be temporarily out of work. However, the community has weathered that storm before. What concerns him more is the potential for the U.S. to default on its debt.

“If the federal government actually defaulted on October 18, then it would affect everything from mortgages, to credit cards, to basically the recovery from COVID-19. We’ve never had an environment before where we’ve had a global pandemic and a financial crisis, and we probably don’t want to experience that,” McNab said.

McNab says that would raise interest rates, lead to job loss and probably spark an immediate recession.

On Tuesday, Treasury Secretary Janet Yellen told Congress that the treasury department will exhaust all of its measures to avoid a default by Oct. 18.

McNab says the only thing people can do right now is call their local lawmakers and voice their concerns.

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