A week after the Super Committee announced its failure to come to an agreement on budget cuts, we’re still sifting through its impact on the economy and specific sectors. In immediate news, while Fitch Ratings did not downgrade the US’s AAA credit rating, the committee’s inability to reach a deal was a leading factor in the rating agency’s decision to cut the U.S. debt outlook from stable to negative on Monday. And even as President Obama threatened last week to veto any bills passed by Congress to repeal the spending-cut trigger known as sequestration, some House members are still discussing ways to adjust or back out of the automatic cuts.
How would the sequester affect defense and healthcare sectors, where automatic cuts will take place? It’s been reported the defense cuts would likely cause thousands of layoffs and plant closures. In health care, it’s expected that health care providers and insurers would be hurt from the automatic Medicare cuts.
While we wait to see if the sequester cuts actually happens, let’s take a look at how the defense and health care sectors performed following the passage of the Budget Control Act of 2011 and in the wake of the Super Committee failure.