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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