Local economies show glimmers of recovery
The economy is showing distinct signs of improvement in Boulder, Colo. Specifically, retail sales tax revenue, a strong indicator of consumer confidence, is up about 6 percent, says Boulder Chief Financial Officer Bob Eichem. “We're hoping that it's the spring of an economic recovery that will stabilize and continue here in Boulder,” he says.
Boulder is not alone in seeing some glimmers of an economic recovery, according to a survey from the Washington-based National League of Cities (NLC) released June 6. In fact, 45 percent of survey respondents report that the health of the retail sector is improving. Also, 28 percent report that business permits and licenses are improving, and 35 percent report increased investments in new infrastructure and capital projects during the past six months.
The Washington-based U.S. Conference of Mayors' U.S. Metro Economies report, also released in June, anticipates that the nation's gross domestic product will jump from a sluggish 1.9 percent growth during the first half of 2011 to 3.5 percent for the second half. And, it predicts that, by December 2014, more than half of metro areas will have returned to their previous peak employment levels, assuming Congress extends the debt ceiling without any disruptions to the national and global systems.
Still, it is not yet time to celebrate a return to normalcy. Both reports contained mostly bad news, showing ongoing high unemployment and dropping home values. “There's certainly a glimmer of hope at the city and metro level, but the reality is, the next couple of years are going to be really challenging,” says Chris Hoene, director of NLC's Center for Research and Innovation. “It's probably [from] 2013 on where we start to see some revenue growth and some return to a period where [cities] can start moving back into maybe filling some holes [left by] cuts they had to make [in services].”
Even then, it could be longer before cities will be able to provide services on a pre-recession level, Hoene says. “I think there's been a big reset of the economic and fiscal picture locally here,” he says. Combine that with long-term obligation challenges in terms of pension and healthcare costs, and local government services are likely to be “very constrained for the next five to 10 years,” Hoene says.