For Many American Cities, the Economic Downturn is Already Here

March 4, 2020

The current economic expansion, now in its eleventh year, has shown the resiliency of the American economy. Unemployment is at a historic low and economic growth has remained consistent, if moderate. However, just because the American economy as a whole is performing well, it does not mean that economies throughout all of American are doing well.

A recent analysis from the Wall Street Journal looked at revenue for cities across the country and found some troubling signs. The portion of American cities expecting revenue to fall more than 3 percent in fiscal year 2019 is 27 percent. This is a large jump from 2018, when just 17 percent of cities saw a similar decline. The total revenue from the cities that the WSJ looked at is expected to be lower in 2019 than in 2018. This is the first time that revenues have dropped since 2012. Moreover, an increasing number of cities that may not be seeing net revenue declines are seeing their revenue increase fail to keep pace with inflation. 

These cities come from across the nation, and account for both rural towns and larger cities. The problem for many of these locales is that the problem exacerbates itself. As towns lose jobs and cut services, people leave and property values fall, leaving the cities with increasingly lower revenue streams. Furthermore, many of these municipalities face ballooning pension debt obligations. When an inevitable larger economic downturns occur, these cities may see their prospects fall even farther.

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