Is Your Metro Area on the Edge of a Fiscal Cliff?

The topic of sequestration is on everyone’s mind today and the nation’s legislators are faced with some tough decisions. Sequestration, by definition, refers to automatic across-the-board spending cuts that will take place if a budget deal isn’t cut by tomorrow.

While many state and local officials are putting pencil to paper to see how the cuts will affect them directly, it’s important to remember that the federal government spends more than $500 billion each year through contracts with private industry in the United States. These funds make their way into regional economies as the federal government procures goods and services, supporting businesses and jobs.

So which metro area economies are most dependent on revenues derived from contract work for the federal government? Which ones are most at-risk due to the impending budget cuts? We took a look at federal contract spending data and assigned it a metro geography based on where the awarded firm performed the work. Then we divided that amount by the total number of jobs in each region.

The interactive map below shows how federal contract dollars are concentrated in the nation’s 369 metro areas. At the top of the list is the Pascagoula, MS, a small metro area with businesses employing about 55,000 people. Pascagoula is home to naval shipbuilding giant Ingalls Shipbuilding, which was founded there on the banks of the Pascagoula River in 1938. Ingalls is one of Mississippi’s largest employers. Over the past three years, federal contract spending has averaged $3 billion a year in Pascagoula. That’s more than $54,000 federal dollars spent locally for each job in the metro area.

Will sequestration happen? That remains to be seen. It’s safe to say federal spending will be reduced in the future, perhaps with a bit more surgical precision than sequestration mandates. Regions should understand their exposure as it relates to these issues and be prepared to support businesses (and employees) who could be impacted.

You can download the full list here.

The Top 10 Metros Area by Federal Contract Concentration

You can download the full list here.