The increasing potential for "sequestration" budget cuts would create further problems for an economy that is still affected by a high unemployment rate.
The deadline is looming Friday for lawmakers to act before $85 billion in spending cuts automatically go into effect.
According to recent comments by U.S. Rep. Bill Enyart, D-Belleville, this will mean as many as 4,500 civilian employees out of 7,000 at Scott Air Force Base, the region's biggest employer, would be forced to take a weekly unpaid day of vacation for the next 22 weeks and cause at least $28 million in direct economic losses as part of more than $43 billion worth of Department of Defense cuts.
Although the budgetary slashing would be split between defense and discretionary spending, the executive director of a member-based economic development organization that serves St. Clair and Madison counties believes these furloughs will eventually impact more workers throughout the metro-east economy.
"Those cuts will trickle throughout the economy," said Ellen Krohne, executive director of Leadership Council Southwestern Illinois in Edwardsville. "As we go from school districts that will be impacted, I think there will be some cuts from sequestration as we move around the university system. I think there is going to be quite a large impact from sequestration on the economy because of the pieces that will be impacting the employment in those organizations."
St. Louis-area financial analyst Juli Niemann believes this option will lead to layoffs and unrenewed contracts within U.S. businesses that could happen a year from now.
"This is just the first curve in the slalom on the way down," said Niemann, of Smith Moore in Clayton, Mo.
She also said this will ultimately do more harm than good as the unemployment remains around 8 percent. She said the nation's debt and deficit should not be addressed before the unemployment rate at this time.
"This really has a big domino effect," she said. "It will immediately affect people and departments that are not going to be hiring to replace jobs."
Experts across the country warn that sequestration could lead people to once again put off spending on big ticket items, such as houses, cars and flat-screen TVs. Furloughs mean people will have less money to spend, even if they still have jobs.
Connie Stellhorn, president of the Realtor Association of Southwestern Illinois in Belleville, agreed that sequestration will drive up an already high jobless rate.
"The major impact sequestration will have on our industry is the potential for the loss of good-paying, middle-class jobs by a population that is transitory and mobile," Stellhorn said. "Government workers and contractors are routinely transferred from base to base or program to program, meaning they buy and sell their homes frequently. They ultimately retire with a decent pension that allows them to buy the retirement home they've worked for."
This deadline is coming as the U.S. housing market has witnessed a recent resurgence. On Wednesday, the National Association of Realtors reported that pending home sales rose 4.5 percent in January -- the highest reading since April 2010.
In Glen Carbon, Greater Gateway Association of Realtors President Al Suguitan said he is not sure if the sequestration would affect the housing industry. He is still confident that the nation's fiscal status will improve, with or without sequestration.
"My guesstimation is it will have a small impact, initially, but I have faith that these issues will be worked out at the federal level," Suguitan said. "I just do. It's the same with the debt ceiling."
Niemann is not so confident in federal lawmakers. She said sequestration would only further hurt the economy by making it more difficult to generate much-needed revenue. She said the focus now should be on job creation.
"The debt and deficit are for another day," she said. "Today, the only issue is unemployment."
Contact reporter Will Buss at email@example.com or 239-2526.