Inevitably, the state will feel the sting of the mandatory cuts to national defense spending, which totaled $711 billion in 2012, more than any other country, according to the Stockholm International Peace Research Institute.
Although that amount accounts for the ongoing conflicts in Iraq and Afghanistan, $13 billion of that amount funds defense contracts in Arizona.
Sequester requires the federal government to trim $85 billion of spending, split evenly between defense and domestic programs.
For Arizona, that translates into a potential loss of $2.3 billion in spending and economic activity, according to according to an article on BizJournal.com, the digital edition of the Phoenix Business Journal.
Home to defense giants such as Boeing Co., Raytheon Co., Intel Corp. and Honeywell International, Arizona is ranked sixth in the nation among states with defense contracts.
But those are the just the titans among the 2,000 other companies in the state related to aerospace, defense and related industries, according to the same Business Journal article.
Of those, 800 companies are located in the Phoenix metro valley.
Of the tens of thousands of jobs those companies provide, 49,000 may be lost as a result of sequester.
According to Wells Fargo Securities LLC, 11.8 percent of the state’s entire GDP comes from federal and Pentagon spending, with each contributing 6.6 and 5.2 percent, respectively.
Another Business Journal article warns that sequester could have long-term negative impacts on the state even if Congress hashes out a deal because sequester may force companies dependent on defense contracts to consolidate their operations elsewhere, specifically in states with Congressional delegations that are proponents of federal spending.
Arizona’s delegation has traditionally been staunchly opposed to “pork-barrel” spending, a stance that has long brought criticism from those in the economic development sector.
Still, the Greater Phoenix Economic Council said during a recent forum that the sequester presents the valley with an opportunity to look to other high-tech sectors for revenues.
Also, some businesses can prepare for sequestration and may even be able to get compensation for furloughs or layoffs, Patrick O’Grady, managing editor of the Phoenix Business Journal, said in a recent blog post.