The BGOV Barometer, ranking the states by the share of their economies tied to federal contracts, shows Washington, D.C., and neighboring Virginia relying on government awards for more than 10 percent of their gross domestic products. Maine is next, with 9.9 percent, followed by New Mexico, at 8.9 percent, according to federal data compiled by Bloomberg.
Those states may be hit hardest by 10-year automatic budget cuts, called sequestration, that will begin Jan. 2 if Congress and the Obama administration fail to agree on a deficit- reduction plan/.../
The sequester would have a “ripple effect” on the states’ economies, Todd Harrison, a senior fellow at the Center for Strategic and budgetary Assessments, said in an interview.
Jobs generated from contracts would decline, which might lead to a decrease in taxes paid to the state and more people qualifying for government services, he said.
“People aren’t going to be out there spending money,” Harrison said. “People aren’t going to be buying as much gas. They aren’t going to be buying as many groceries.”