If shutdown continues, Ala. economy threatened - WSFA.com: News Weather and Sports for Montgomery, AL.

If shutdown continues, Ala. economy threatened

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If the federal government shutdown continues past just a few days, then it could put Alabama's fragile economy on a path to disaster.

"For Alabama, 3% of our economy is at risk" said Dr. Keivan Deravi, an economist at Auburn University Montgomery. Deravi has been influential in the state's budgets as well as corporate recruitment efforts.

"If we just take a look at not only the wages and salaries but also the overall spending, that will come to about $5 billion" Deravi said.

Alabama has more than 40,000 federal employees. It's unclear how many of them are considered "essential" as opposed to "non-essential" employees.

The US Chamber of Commerce, a Washington D.C. based corporate interest group also called on Congress Tuesday to end the government shutdown. The group drafted a letter to all members of Congress.

The letter said, "With the U.S. economy continuing to underperform, the federal government needs to maintain its normal operations pending a successful outcome of broader budgetary reforms. It is not in the best interest of the employers, employees or the American people to risk a government shutdown that will be economically disruptive and create even more uncertainties for the U.S. economy."

In addition to comments about ending the shutdown, the US Chamber also urged the Congress to raise the debt ceiling "in a timely manner."

The federal government is expected to reach its borrowing limit by October 16 or 17.

Billy Canary, CEO of the Business Council of Alabama and representative of the US Chamber of Commerce, said the current state of affairs in the nation's capital is not good for the corporate community.

"It's not the best course to take" Canary said. "We're working with a fragile economy that's recovering and it's just not the right time."

Without shouldering blame specifically on either side of the aisle, Canary criticized members of Congress for not prioritizing which issues need to be sorted out now.

"The debate should be in Washington about spending and the approaching debt ceiling... We're talking about a government that spends $11 billion each day with revenues of only $6 billion. Spending and borrowing is where the focus needs to be" Canary said.

On the debt ceiling, Deravi with Auburn Montgomery, warned that not raising the nation's borrowing limit could spell disaster for the state and for the country.

"It won't send us into a recession" Deravi warned. "That could send us into a depression."

Deravi says if Congress can't reach an agreement on the debt ceiling, it could send ripple effects throughout the world economy.

"It will affect everything. That will impact our imports, our exports, our exchange rate, purchasing power, everything" Deravi said.

Deravi said perhaps worst of all, not raising the debt ceiling fuels doubt and uncertainty with the nation's creditors.

"We have never been exposed to such reckless practice."

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