Survey Shows Glimmers of Hope, but Local Economies Still Reeling from Recession

June 06, 2011

by Christiana McFarland

Cities continue to confront the fallout of the recession, although some signs point to business and economic activity improving, according to an NLC survey of actions and perceptions of city officials. Responses to the Local Economic Conditions survey, the first in a multi-year tracking effort, highlight the continuing challenges posed by the recent recession and also, in a number of instances, mirror national indicators of turn-around and stabilization in the U.S. economy.

In good news, 45 percent report that the health of the retail sector is improving, and 28 percent report that business permits and licenses are improving. Additionally, more than one in three officials (35 percent) report increased investments in new infrastructure and capital projects during the past six months.

Despite these glimmers of hope, the impacts of the recession are still hitting local economies hard. More than one in two (51 percent) officials report that residential property values have worsened over the past six months, 44 percent report that commercial property values have worsened, and 41 percent report that the demand for survival services, including food banks and shelters, has worsened.

In the face of these hardships, municipal bond activity (89 percent reporting no change or improving) and municipal rolling stock (85 percent reporting no change or improving) have remained notably stable in cities across the country.

Looking to the future, city officials report that small business development (54 percent), transportation infrastructure (49 percent), education/workforce training (31 percent) and housing and neighborhood development (25 percent) are the areas most in need of investment to help generate economic growth.

When asked about international sources of growth, 83 percent say that expanding trade opportunities and attracting foreign investment are important to the success of their local economy.
The Local Economic Conditions survey is the first in a new series from NLC’s Center for Research and Innovation. The purpose of the survey series is to provide a parallel track to NLC’s 25-year survey on City Fiscal Conditions.

“Our work on city fiscal conditions has shown over the years that there is, approximately, a two-year lag between economic shifts and impacts on local revenues,” said Chris Hoene, the center’s director. “We hope this new survey series will help us better report on and predict changing economic and fiscal circumstances in cities.”

NLC’s design and analysis of the survey included collaboration with researchers at the Maxine Goodman Levin College of Urban Affairs at Cleveland State University and the College of Urban Planning and Public Affairs at the University of Illinois at Chicago.

The next iteration of the survey is planned for late summer.

For the survey, a random sample of 1,100 local officials from different cities across the country was drawn from the NLC database of municipal officials. The survey was e-mailed to all of the officials in the sample in late January 2011 and responses were collected in February and March. A total of 271 valid responses were received and tabulated, resulting in a 25 percent response rate.

With this response rate, it can be expected with a 95 percent degree of confidence (i.e., in 95 out of 100 random sample surveys) that the answers to the survey questions from another random sample of municipal officials would be within 5.1 percentage points (+/- 5.1%) of the results of this survey.

Details: For more information about the survey, please contact Christiana McFarland at mcfarland@nlc.org or (202) 626-3036.