South By North Strategies, Ltd.

Measuring Local Fiscal Conditions

Earlier this summer, the North Carolina State Treasurer unveiled a new management tool for county and municipal governments: a web-based dashboard for County and Municipal Fiscal Analysis.

Developed by faculty members of the UNC School of Government, the dashboard is ” a management tool that helps local governments in North Carolina analyze and communicate their financial condition.”

To help public officials and citizens better understand the relative performance of their communities, the dashboard also provides “context by presenting five-year trend data for each financial indicator and permitting comparison against other local governments selected as benchmark peers.”

The dashboard is a simple yet powerful tool that can help journalists, policymakers, and citizens better understand the complexities of county and municipal finances.

Battered and Bruised: Middle-Class America

The Financial Times reports on the forces weighing on middle-class American households.

The slow economic strangulation of the Freemans and millions of other middle-class Americans started long before the, which merely exacerbated the “personal recession” that ordinary Americans had been suffering for years. Dubbed “median wage stagnation” by economists, the annual incomes of the bottom 90 per cent of US families have been essentially flat since 1973 – having risen by only 10 per cent in real terms over the past 37 years. That means most Americans have been treading water for more than a generation. Over the same period the incomes of the top 1 per cent have tripled. In 1973, chief executives were on average paid 26 times the median income. Now the multiple is above 300.
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The trend has only been getting stronger. Most economists see the Great Stagnation as a structural problem – meaning it is immune to the business cycle. In the last expansion, which started in January 2002 and ended in December 2007, the median US household income dropped by $2,000 – the first ever instance where most Americans were worse off at the end of a cycle than at the start. Worse is that the long era of stagnating incomes has been accompanied by something profoundly un-American: declining income mobility.

The article also asks if middle-class America is still viable and what a decline might mean for the nation.

What, then, is the future of the American Dream? Michael Spence, a Nobel Prize-winning economist, whom the World Bank commissioned to lead a four-year study into the future of global growth, admits to a sense of foreboding. Like a growing number of economists, Spence says he sees the Great Stagnation as a profound crisis of identity for America.
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For years, the problem was cushioned and partially hidden by the availability of cheap debt. Middle-class Americans were actively encouraged to withdraw equity from their homes, or leach from their retirement funds, in the confidence that ­property prices and stock markets would permanently defy gravity (a view, among others, promoted by half the world’s Nobel economics prize winners, Spence not included). That cushion is now gone. Easy money has turned into heavy debt. Baby boomers have postponed retirements. College graduates are moving back in with their parents.
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The barometer is economic. But the anger is human and increasingly political….

Around The Dial – August 2

Economic policy reports, blog postings, and media stories of interest:

• Christina Romer of the CEA discusses GDP numbers.
• EPI analyzes the new GDP figures.
• Robert Shiller asks, “What would Roosevelt do?”
• William Gale debunks five myths about Bush-era tax cuts.
• The New York Times reports on obstacles to raising exports.

Food Stamp Trends In NC

Last week, the U.S. Senate agreed to provide additional Medicaid and educational funding to state governments. Funding for those items will come from reductions to the Supplemental Nutrition Assistance Program, better known as Food Stamps. While the move is somewhat complicated and will not result in a short-term benefit reduction, the choice should call attention to the importance of food stamp assistance.

The severity of the recent recession has led to a surge in the number of persons receiving food assistance, which generally is limited to households with incomes no greater than 133% of the federal poverty level.

Between 12/07 and 4/10, the number of Americans receiving assistance grew by 12.8 million (+46%), climbing to 40.4 million from 27.6 million. Put differently, 13.2 percent of all Americans were participating in the program last April.

As the graph shows, the same pattern has occurred in North Carolina. Between 12/07 and 4/10, the number of Tar Heels receiving assistance grew by 411,400 (+45%), climbing to 1.3 million from 923,000 million. Put differently, 14.2 percent of all North Carolinians were participating in the program.

The Future of The Auto Industry

A recent segment on the PBS NewsHour discussed the future of the American automotive industry and the larger issues facing the nation’s manufacturing sector.