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DEFENSE COMMUNITIES 360

Analysts Question Job Loss Forecasts

  • November 3, 2011
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Two recent articles shoot down catastrophic predictions that a million or more jobs would be lost if defense spending is cut by $1 trillion over the next decade in a worst-case scenario.

In September, Defense Secretary Leon Panetta stated that 1.5 million Americans would lose their jobs, resulting in a 1 percentage point increase in the unemployment rate. The forecast “seems like a high figure,” however, Heidi Garrett-Peltier of the Political Economy Research Institute at the University of Massachusetts told CNN’s Security Clearance blog.

She estimated that at most 1.2 million jobs would be lost, causing the unemployment rate to rise from 9.1 percent to 9.8 percent.

On the Capital Gains and Games blog, Gordon Adams, a professor at American University’s School of International Service, takes exception to last week’s projection by the Aerospace Industries Association that a $1 trillion drop in defense spending would force 1 million Americans to lose their jobs. That estimate is flawed, he concludes, because it relies on a static analysis of the reduction in spending, ignoring the offsetting impact of non-federal activity that would partially take its place.

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