Skip to main content

Optimism on Economic Recovery May Be Premature

Wait until next year?

Many of us in Chicago find ourselves saying “wait until next year” more often than we would like – especially our long-suffering Cubs fans.

Recently, though, we have been hearing that refrain from optimists in government and the media about our slumping economy. “We have bottomed out,” many say. “We’re turning the corner – next year will be better.”

Just like our sports prognosticators, I hope they are right – but I fear their optimism is a bit premature.

Here are a few reasons why:

  • Recent employment numbers show this summer’s “recovery” was based almost entirely on public sector employment, from census workers to those employed on stimulus projects. That helps prove up the value of the Recovery Act, but there are few indications that the private sector recovery has gained a strong foothold – and there are few indications that more federal stimulus dollars are on the way.
  • State and municipal support is declining. Falling sales tax revenues, decreased property tax collections and high unemployment are straining budgets mightily. Many states and cities plugged budget holes this year with stimulus funds. When those run out next year, we likely will see major cuts in services and hefty tax increases. (According to the Center on Budget and Policy Priorities: 46 states are facing budget gaps that will require them to cut spending or raise taxes by $180 billion in 2011.) Don’t expect increased community development support from your city or state next year.
  • The retail sector is hurting big time and will continue to suffer in the year ahead. Have you noticed the “for rent” signs in your neighborhood shopping center? What will happen next year, when their five-year commercial mortgages are up for renewal, but the property values have plummeted? Developers and shopping center owners will be struggling to get the financing they need – and the rents they need to secure the financing.
  • To make matters worse, our inner-city communities typically are the last to come back from a recession. Developers tend to invest in what they consider “safer communities.” Lenders do the same.

In short, in the words of that wise economist Yogi Berra, “It ain’t over till it’s over.” We have a long way to go toward a full-fledged recovery.

Yet, as bleak as the picture may seem, I am not so discouraged. How can any inner-city neighborhood combat the forces of economic decline? I would suggest that comprehensive community development is the best and most appropriate way to prepare and position ourselves for recovery – to create strong, resilient communities that can take advantage of opportunities and withstand shocks. The strategies that have been devised by communities across the nation through the LISC Building Sustainable Communities program are precisely what is needed for any community to be healthy and strong: creating affordable housing, quality schools, and safe environments; preparing young people to become productive members of society; developing a skilled and able workforce and supporting economic growth; engaging communities to produce the ideas and energy to innovate and solve their own problems.

Our gains over the past decade have been difficult and hard-fought. But we have learned something very important. The answer will not come from our government or the beneficence of the private sector. We can partner with our politicians and collaborate with our many friends in the private sector. But in the end, our communities must rely upon themselves.

Joel Bookman is Director of Programs for LISC/Chicago and Deputy Managing Director of the Institute for Comprehensive Community Development.

 

 

Keywords: comprehensive, economic development, economy, recovery

Posted in Thinking Out Loud

Stay connected

Stay up to date with news and events related to the Institute:

Facebook
Flickr