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Federal budget cuts could have local impact

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KANSAS CITY, Mo. -- The March 1 deadline is here and still no deal to avert the sequester. So now federal agencies will start implementing the $85 billion budget cuts. It's still not clear what's all included in the cuts but jobs are on the line and some employees will face furloughs or big salary cuts.

Federal employees we talked to said this will have an impact on their family budget and they're already thinking about how they can tighten their belts. And economists say that will have a ripple effect in the community.

Deborah Love works in the Social Security office and says she's very worried about the idea of furloughs or salary cuts.

"We need to eat now and if I can't eat, I can't spend money on other things," she said.

Frank Lenk is an economist with MARC, the Mid America Regional Council, and says there are 27,000 federal employees in the metro. That's about the size of the city of Grandview, Mo. He says the sequester could mean a lot of people without jobs or with smaller paychecks.

"So as people cut back on grocery spending or other services medical services for example then that means less money going to providers and their employees," he said, "so it does ripple through, so for every dollar lost we might lose another dollar elsewhere in the economy."

Chef Celina Tio just took over the Kansas City Cafe, just blocks from the Bollings Federal Building, with almost 3-thousand federal employees. So the sequester means several thousand people who might think twice about that after work dinner or drink.

"So it is concerning," Tio said, "but yeah a smaller paycheck, people do change their going out habits their dining out habits, it effects everybody."

Businesses like Tio's have already struggled through the economic downturn. Lenk says the sequester won't send the economy crashing into a second recession but it will slow growth. Right now he's forecasting job growth in the metro of 21-thousand for 2013. But with the sequester in place that number could shrink to 16-thousand jobs.

"So the economy is still growing and most people will see it and think the times are getting gradually better," he said, "but they will get better at a slower pace than they otherwise would have."

Lenk adds that the fights between Congress and the President also adds to uncertainty, impacting investor's confidence. He says that could have a big impact which would slow economic growth even more.

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