The economy is limping along and some are warning of an impending double-dip recession. The Commerce Department is revising its estimate for economic growth for the 2nd quarter of 2010 downward from the original forecast of 2.4 percent to a 1.4 percent annual rate.
The nation’s unemployment rate, now at 9.5 percent is expected to rise by the end of the year. Local unemployment also increased in July according to the Illinois Department of Employment Security. In an area once thought to be recession proof, DeKalb County’s unemployment rate currently stands at 10.4 percent, up slightly from a rate of 10.3 percent recorded in June.
The federal government’s $862 billion stimulus program appears to have had little or no lasting impact. State and local government units have aggressively pursued Build America Bonds due to rebates resulting in lower interest rates. But little of the federal programs have been used for actual job creation. Creative reporting on the use of stimulus funds often report “full-time equivalent” jobs when in reality no jobs were created.
The City of DeKalb recently borrowed more than $1 million so it could give AFSCME and management employees severance pay to terminate jobs while at the same time it borrowed another $1 million for asthetics to bury overhead wires.
Housing, which boosted whatever growth occured in the sluggish second quarter, is now likely weighing against economic growth this quarter. The homebuyer’s tax credit encouraged home sales until it expired in April. Home sales fell sharply in July.
New home construction has continued to fall flat. It made up more than 6 percent of the economy at the height of the construction boom in 2005 and was creating jobs in almost all sectors and industries. New construction now accounts for only 2.5 percent of the economy and that decline was not accounted for in state, county, municipal and school district budgets.
Local developers have tried to get concessions on impact fees as an attempt to stimulate new housing starts. Rick Hoffman approached Genoa and received limited waivers on impact fees. A few permits were generated. Shodeen Development is now trying to get Sycamore to consider a temporary waiver.
Opponents are concerned that any stimulus of new construction might come at the expense of an already bloated inventory of homes for sale.
One in ten homeowners had missed at least one mortgage payment, as of June 30, 2010, according to the Mortgage Bankers Association. As of August 27, 2010 another couple of hundred local homes are slated for sherriff’s auction by year’s end. According to RealtyTrac there are already 486 bank-owned properties in DeKalb County.
Communities waiting for the feds to turn their local economy around might be in for a long wait — measured in years. The communities likely to rebound in the near future will be those who invest in and foster local consumer driven markets.
The days of public sector empire building are over.
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The flaw in President Obama's is twofold: 1) He didn't immediately divorce the Bush administration's corporate bail out plan and in fact expanded it; and 2) He trusted government too much. Central Development Block GRANTS (CDBG) seemed the perfect avenue for getting recovery monies to Main Street. The President did use it. CDBG-R (R for recovery) guidelines were sent to the local units who promptly exploited the program to continue pet pork projects. Few jobs (the intent) were created at the state or local level.
Its the same deal with Build America Bonds only worse. The feds are rebating interest and passing the accountability buck on to the state and local units who are hell bent on spending the rest of the money they never had from the construction boom days. The path of least resistance is now BABs which for the most part is being used for amenities for the public sector.
I agree with Lynn on bringing federal tax dollars back home and on changes to TIF and CDBG. TIF could be used for job retraining for TIF residents which could provide needed funds for vocational schools and programs to expand their scope and staff. CDBG could be used to entice people who work in a community to live in that community AND for improving energy efficiency and fire protection. But I trust the feds more than the locals at this point. Anyone that would sell the health and welfare of its citizenry to a mega-dump for tipping fees should never be trusted with public funds again.
Double dip? We haven't found our way out of the first dip yet!
Now that the GAO is coming out with the numbers, it is apparent that the stimulus helped us avoid higher unemployment. It had no lasting impact because it was too small and not applied in all the right places. Yeah, I just said that! When my "stagflation" fears didn't pan out, I looked to find out why. Turns out, some of the lessons learned in the 70s and 80s apply but others don't. You really do need to go back to the Great Depression to understand how to deal (heh) with it.
I do agree that we can't wait for the cavalry (feds) to come. It is at this moment politically impossible to avoid austerity at the national level, so we are destined to experience a lot of extra pain. We have nothing to lose by fighting for measures that increase local self-sufficiency. That includes using TIF, CDBG, and yes, maybe even impact fees differently than we did in 2006.
Meanwhile, let's also continue to fight to bring our federal tax dollars back home for these purposes as well.
Mac.. Nice article and I would like to add my thoughts. It seems so many are looking to Washington for the answer when, in fact, the answer may be local.
I think the waiver of local impact fees is worth following.
I am not sure the source but I read recently that building a new home is the equivalant of 3 full time jobs for 1 year. I also read comments that the Obama Administration is not helping small business people and not generating new jobs.
But then I read about small business people ( like home builders) who are not looking for help from the federal government but see all the fees and taxes placed on them at the state and local level as the problem.
Some have said "waive the local fees and taxes and we can go back to work." I say why not.
Now I know of at least 2 arguements that wll be used to not waive these fees.
1. We already have a huge inventory of unsold homes in the area.. I say so what. If home building is manufacturing what do we really care what the manufactures inventory is. Do we care about how many cars the auto makers keep in their inventory? Believe me the home builders will know when to stop and they have a complete inventory.
My second on this topic is are the impact fees really in place to protect the impact on schools and other government bodies or are they there to protect the property values of existing homes? Granted there are allot of homes on the market but given the chance would someone buy a new or or existing home?
Another arguement is that impact fees are needed to offset the impact on the local schools. Look at DeKalb that has so much school space it is closing building and not using space in the new High School. I ask what is better for all involved. New homes with newly created jobs that fill unused space along with the increase in property taxes these new homes will generate or no one working . sorry phone just rang and I have to run. More later.
Well said. The time HAS arrived for a new economy from the bottom up. A people based economy not a greed based economy. An economy that is built on creating sustainable communities that meet the real wealth needs of those who live in the community. The need for a healthy environment, a living wage, time with family and friends. Time to Go Local and stay local.
May I respond publically to a privately asked question about my logic.
IMO in todays evolving enviroment, any building project from the time of conception until the time of completion becomes obsolete just in the time it takes to build the building.
As an example a community today may start to plan on building a new school using present technology. In reality by the time the building is completed is is already obsolete as the technology outpaced the time it took to build the buildng itself.
If you agree with this then building a building for " future growth" only extends the time the obsolute building will be used.
Closer to home look at the new DeKalb High School. Just like any other school being built today many state it will be obsolute within a few short years. If that is the case why is it then built to handle expansion well betound it's useful time?
Hope this makes sense