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Advocacy Executive Director's Reports Cities and towns are our economic safety net
Massachusetts knows how hard it is to recover from an economic recession. The last two have hit the Bay State (and all of New England) harder and longer than the rest of the country. We are still down 100,000 jobs, people have moved out of the region looking for better prospects and not come back, and fewer major employers have remained in our state.
All of this is good reason to be concerned about the growing sentiment among Americans and economists that another recession isn’t just around the corner – it’s just ahead of us.
Those of us interested in polls, trends, and the public mood have “Gallup.com” on our list of Web favorites, and check in with the experts at the Gallup Organization on a regular basis. This free resource provides a wealth of information and insight. Following the “bad news comes in threes” rule, several recent Gallup surveys underscore just how badly Americans are feeling about our economy and our prospects over the next year.
First, Gallup pollsters report that 50 percent of Americans are now worried about maintaining their standard of living, exceeding the number who were so worried during the 1991-1992 recession. Gallup’s analysis is that consumers are being squeezed by higher prices for food, energy, health care, and a college education, and lost jobs, declines in the stock market, and all the problems associated with the housing market have negatively affected families’ perceptions of their financial situations. This is bad news for those hoping for a recovery in consumer spending in the near future.
Second, a Gallup Poll conducted in early February “finds 34 percent of Americans mentioning ‘the economy’ in general terms as the most important problem facing the country. That is nearly double the 18 percent who said this in January, and is the highest Gallup has measured since another 34 percent reading in February 2003. The last time a higher percentage of Americans gave this response was at the tail end of the first Bush presidency in December 1992 and January 1993.” The economy has “surged” ahead of the war in Iraq as the issue of greatest concern to more people.
Finally, Gallup’s recent daily tracking polls reveal a continuing deterioration in consumer confidence that underscores Americans’ worries over their standard of living and the sagging economy. A staggering 79 percent of the public believes that economic conditions are getting worse.
In an ominous development, more middle-income consumers are expressing pessimism, indicating that the national financial squeeze is spreading, and neither the interest rate cuts nor the stimulus package signed into law have swayed consumer confidence.
In summary, the national public mood is grim, a very bad sign for those businesses that depend on consumer spending. With retail, financial, housing and construction sectors all facing extraordinary problems, and with inflation reemerging as a negative factor, all the signs point to a recession, regardless of whether we meet the technical requirement of negative growth over two consecutive quarters.
Of course, we know that economic recessions hit communities in the Northeast very hard, especially in Massachusetts, where we have an over-reliance on the property tax to fund essential services at the local level, and at the state level we depend on high wage jobs to support the state budget.
In terms of the property tax, a deep state recession will clearly cut into the new growth (from new and improved residential housing, and industrial and commercial expansions) that is so important to supplement the 2½ percent levy limit increase allowed each year. For those communities eyeing Proposition 2½ override efforts, last year’s 50 percent approval rate could very well decline as voters go to the ballot box more worried about their pocketbooks than they have been since the early 1990s. And if consumers delay large purchases such as new cars, the automobile excise tax will be stagnant or decline as well. Unchecked, today’s budget woes will expand.
We can’t simply stand still waiting for the recession to come. Now, more than ever, Massachusetts needs to take action to protect our state and our communities from the worst, and position us for a swifter and more effective recovery.
As economists throughout the nation have been saying for several years, cities and towns are the building blocks of a strong economy, delivering the essential quality of live services that attract and keep families and businesses here. Individuals and business invest their families and their money in localities that offer what they want – education, public safety, sound transportation, recreation and cultural amenities, and more. These investments are our insurance policy against a repeat of the past, and a down payment on our future.
This is the time to empower and fund cities and towns adequately, and to make these investments before we are overwhelmed by a national recession that will make it harder than ever to recover. The state is currently pursuing a policy to increase investment in biotech and life sciences, the film industry, and other niche or silo aspects of our economy. While those are laudable actions, nothing will help Massachusetts more than investing in the fiscal health of the communities of our Commonwealth.
Cities and towns are our state’s economic safety net, and the springboard for a faster recovery. Let’s make sure that we secure the net, and strengthen the board.
Advocacy Executive Director's Reports Cities and towns are our economic safety net
Cities and towns are our economic safety net
Massachusetts knows how hard it is to recover from an economic recession. The last two have hit the Bay State (and all of New England) harder and longer than the rest of the country. We are still down 100,000 jobs, people have moved out of the region looking for better prospects and not come back, and fewer major employers have remained in our state.
All of this is good reason to be concerned about the growing sentiment among Americans and economists that another recession isn’t just around the corner – it’s just ahead of us.
Those of us interested in polls, trends, and the public mood have “Gallup.com” on our list of Web favorites, and check in with the experts at the Gallup Organization on a regular basis. This free resource provides a wealth of information and insight. Following the “bad news comes in threes” rule, several recent Gallup surveys underscore just how badly Americans are feeling about our economy and our prospects over the next year.
First, Gallup pollsters report that 50 percent of Americans are now worried about maintaining their standard of living, exceeding the number who were so worried during the 1991-1992 recession. Gallup’s analysis is that consumers are being squeezed by higher prices for food, energy, health care, and a college education, and lost jobs, declines in the stock market, and all the problems associated with the housing market have negatively affected families’ perceptions of their financial situations. This is bad news for those hoping for a recovery in consumer spending in the near future.
Second, a Gallup Poll conducted in early February “finds 34 percent of Americans mentioning ‘the economy’ in general terms as the most important problem facing the country. That is nearly double the 18 percent who said this in January, and is the highest Gallup has measured since another 34 percent reading in February 2003. The last time a higher percentage of Americans gave this response was at the tail end of the first Bush presidency in December 1992 and January 1993.” The economy has “surged” ahead of the war in Iraq as the issue of greatest concern to more people.
Finally, Gallup’s recent daily tracking polls reveal a continuing deterioration in consumer confidence that underscores Americans’ worries over their standard of living and the sagging economy. A staggering 79 percent of the public believes that economic conditions are getting worse.
In an ominous development, more middle-income consumers are expressing pessimism, indicating that the national financial squeeze is spreading, and neither the interest rate cuts nor the stimulus package signed into law have swayed consumer confidence.
In summary, the national public mood is grim, a very bad sign for those businesses that depend on consumer spending. With retail, financial, housing and construction sectors all facing extraordinary problems, and with inflation reemerging as a negative factor, all the signs point to a recession, regardless of whether we meet the technical requirement of negative growth over two consecutive quarters.
Of course, we know that economic recessions hit communities in the Northeast very hard, especially in Massachusetts, where we have an over-reliance on the property tax to fund essential services at the local level, and at the state level we depend on high wage jobs to support the state budget.
In terms of the property tax, a deep state recession will clearly cut into the new growth (from new and improved residential housing, and industrial and commercial expansions) that is so important to supplement the 2½ percent levy limit increase allowed each year. For those communities eyeing Proposition 2½ override efforts, last year’s 50 percent approval rate could very well decline as voters go to the ballot box more worried about their pocketbooks than they have been since the early 1990s. And if consumers delay large purchases such as new cars, the automobile excise tax will be stagnant or decline as well. Unchecked, today’s budget woes will expand.
We can’t simply stand still waiting for the recession to come. Now, more than ever, Massachusetts needs to take action to protect our state and our communities from the worst, and position us for a swifter and more effective recovery.
As economists throughout the nation have been saying for several years, cities and towns are the building blocks of a strong economy, delivering the essential quality of live services that attract and keep families and businesses here. Individuals and business invest their families and their money in localities that offer what they want – education, public safety, sound transportation, recreation and cultural amenities, and more. These investments are our insurance policy against a repeat of the past, and a down payment on our future.
This is the time to empower and fund cities and towns adequately, and to make these investments before we are overwhelmed by a national recession that will make it harder than ever to recover. The state is currently pursuing a policy to increase investment in biotech and life sciences, the film industry, and other niche or silo aspects of our economy. While those are laudable actions, nothing will help Massachusetts more than investing in the fiscal health of the communities of our Commonwealth.
Cities and towns are our state’s economic safety net, and the springboard for a faster recovery. Let’s make sure that we secure the net, and strengthen the board.
Written by MMA Executive Director Geoff Beckwith
