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October 16, 2013

Federal workers, financial experts still cautious

A temporary deal could lead to more worry in a few months

(Continued)

> SOUTHERN INDIANA — THE REGION

Uric Dufrene,  executive vice chancellor of academic affairs at Indiana University Southeast, called a deal “significant for the region.”

“Any default would have caused an increase in interest rates, and this would have taken some of the oxygen away from local [economic] recovery,” he said.

He said a jump in interest rates would reduce the demand for durable goods, such as automobiles, and would have negatively impacted the national housing recovery.

“Manufacturing did see growth in the region, and this growth is tied to automobile production, and more recently, recovery in the national housing market,” he said. “Higher interest rates, as a result of the default, would have taken the wind from the sails of the regional recovery.”

Dufrene said that uncertainty is not desirable for any type of investment.

“Households are willing to invest and buy goods and services if macroeconomic conditions are certain, and the same applies for business,” he said. “Any events that introduce uncertainty into the macro environment will adversely impact consumer confidence and the willingness of business to invest in capital equipment and expansion.

 — Staff writers Matt Koesters, Braden Lammers, Daniel Suddeath and The Associated Press contributed to this report.

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