Economist Beth Ann Bovino.

• Position: FOR THE RECORD - Interview

Beth Ann Bovino was recently named U.S. chief economist for Standard & Poor's Ratings Services, where she develops U.S. economic forecasts, writes popular publications on the U.S. economy, and is known for her exceptional ability in forecasting economic trends. Prior to joining Standard and Poor's, Bovino worked on economic and market research with Sungard Institutional Brokerage, UBS Warburg and the Federal Reserve. She has a doctorate in economics from Columbia University, a master's in international and development economics from Yale University, and a bachelor's degree in economics from the Wharton School at the University of Pennsylvania.

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STATE LEGISLATURES: What are the most formidable challenges facing the U.S. economy?

BOVINO: There are a few things that weigh on my mind. Top of the list, of course, is what is happening in Washington, D.C. Now that the U.S. government failed to approve another continuing resolution, the federal government is shutdown, with many workers furloughed without pay. On top of that, the Treasury hits the debt ceiling soon. Both events weigh on the economy and certainly cause businesses to be concerned and hold back on spending and investing.

SL: What else concerns you?

BOVINO: Other factors at play include issues surrounding Europe. Could what's happening with Europe--their debt ceiling and sovereign crisis--show up on U.S. shores and cause banks to hold back on lending as well? And the final thing that worries me is what's happening with the labor market. We are seeing an improvement, but we still have a lot of people unemployed, and for a long time. The longer they stay out of work, the more their skills are hurt and the more likely it becomes that when they do get a job, they will have lower wages.

SL: What are the greatest strengths in the U.S. economy?

BOVINO: After four years of holding back on spending and saving a bit more, businesses are sitting on a lot of cash. This puts us in a good place. One of the bright spots I see is that the private sector has been able to absorb two fiscal shocks--the sequestration and the fiscal cliff deal in January--and still spend, invest and hire. Businesses have added 200,000 jobs a month, even with sequestration. That means people can spend a bit more, which they are doing.

SL: What effect will further gridlock in our nation's capital have on the national economy?

BOVINO: Another factor just starting to play into the economy is furloughs...