S&P forecasts regional growth despite federal cuts

Standard & Poor's Ratings Services said on Thursday that broad federal spending cuts through sequestration should not be a drag on overall economic growth, but will have different effects among the country's regions.

S&P said it expects the strongest growth in 2013 to occur in the mountain region, which encompasses Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming, as well as in the west south central states of Arkansas, Louisiana, Oklahoma and Texas.

Meanwhile, the growth forecast for Pacific states - Alaska, Hawaii, Washington, Oregon and California - "looks slightly dimmer from the vantage point of a few months ago, owing primarily to the expected impact of federal sequestration cuts that went into effect March 1," S&P said in a report.

The rating agency revised its forecast for economic expansion in the mid-Atlantic states of New Jersey, New York and Pennsylvania to 1.9 percent from 1.6 percent in January. The Midwest states of Illinois, Indiana, Michigan, Ohio and Wisconsin were expected to have the slowest growth among the regions due in part to lags in employment growth and the housing recovery, according to S&P.

(Reporting Caryn Trokie and Karen Pierog; Editing by Richard Chang)