- Missing Man Found Dead in Iowa City
- Probable Bird Flu Case in Hamilton County
- Zebra Mussles Found
- Suit over IA Juvenile Home Dismissed
- Taste of Vinton Saturday
- WTC Observatory Opens to Public
- New Gas Tax Pumps in Millions
- Rough 2015 Start for U.S. Economy
- Woman Pulled Over by Imposter
- 911 Texting on the Horizon
- Downtown Construction
- A Few Extra Wheels
- UI Rolls out eCare Service
- New Poll Shows GOP Dead Heat
- Deaths Prompt Corridor Father's Action
- CBJ Report: May 28th
- Iowans Help with Flood Recovery
- Former U.S. House Speaker Indicted
- Body Found in Burned Vehicle
- How Obese is Your Home State?
- AMBER ALERT CANCELLED: Bayli Jordan
- Demolition Continues on IC Cottages
- Lawmakers Still at Budget Impasse
- FIFA President: Alleged Corruption Shameful
- 2 Your Finances
- Bulls Fire Coach Thibodeau
- IA Woman Accused of Abusing Wife
- Traffic Deaths Spike
- Lab Ships Live Anthrax
- Crews Extinguish Cedar Co. Fire
- Tracy Morgan Settles with Walmart
- Fight Over Air Freshener Turns Dangerous
- Big 12 Cracking Down on Court Storming
- Local Veteran Gets His Final Wish
- UI Diversity Training Set to Begin in Fall
- Bird Flu Affecting Egg Prices
- Remaining IC Cottages Demolished
- Fixing Financial Woes
- Strength in Numbers in Iowa City
- Cause of Train Derailment Released
- Unemployment Down in IA
- Preparing for Water Emergencies
- 19-Year-Old Gets 50 Years for Murder
- Serious Gap Remains in Des Moines
- Santorum Joins Crowded GOP Field
- Democrat O'Malley Coming to Iowa
- Seven Face Federal Gun Charges
- 'Field of Dreams' Rezoning Approved
- Prepping for Pride Month
- Escapee Caught
UI Economist: No Financial Fiasco
Updated: Thursday, October 10 2013, 06:38 PM CDT
IOWA CITY, IA (CBS2/FOX28) -- While furloughed families are struggling to make ends meet without paychecks and those on WIC are wondering where their child's next meal with come from -- at an overall economic level -- America is not headed for another financial fiasco if the government does not raise the debt ceiling by October 17, said University of Iowa Associate Professor of Finance Art Durnev.
Durnev studies the intersection of politics and business, and says, Americans need to differentiate between the government's inability to pay its bills, and an unwillingness to pay them.
"So what we have here is just unwillingness to pay," Durnev said.
Think of it like missing a credit card payment, Durnev said. The worst thing that happens is interest rates increase. So, the country might see interest rates increase by a half percent -- and the Federal Reserve is prepared for that, Durnev said.
"No, we should not be worried about (that), and be very selective when you read any sort of news right now," Durnev said.
America's biggest investors, Japan and China, might be wary of doling out money in the future, but Durnev said, the country will still be able to get credit.
Still, the shutdown is taking its toll. Mary MacNeil's son and daughter-in-law work for the Centers for Disease Control and haven't been paid in two weeks.
"They are having a very hard time managing their money when nothing's coming in," MacNeil said.
That will be the biggest problem -- a drop in consumer spending because of furloughs and fear, Durnev said. He knows people are worried about their retirement accounts, too, and has some practical advice: if you can, spend less and save more.
"Don't follow the crowd. If you invest in stocks, keep your money in stocks. Hopefully, hopefully the situation, everything will recover," Durnev said.