SSTI Digest

As the world begins to emerge from the “Great Lockdown” and governments increasingly turn their efforts towards reopening economies, many will look to past recessions for lessons on recovery. This edition of Useful Stats examines the rate of real GDP recovery by state following the recessions of 2001 and 2008.

According to their latest projections, the Congressional Budget Office expects that the U.S. economy will not recover from the current recession until after 2021. However, as seen after the recession in 2001 and again after the Great Recession of 2008, states recover at widely different rates. As shown in the map below, nearly every state had fully recovered to pre-recession levels of GDP within one year following the recession from March to November of 2001. Only three states took longer to recover — with Connecticut taking two years, and Delaware and New York both fully recovering after three years.

School buses across the country are helping school children as they finish a decidedly unconventional academic year but they aren’t transporting students, they are acting as mobile Wi-Fi units bringing connectivity capability to students who lack broadband service. As the coronavirus pandemic closed schools across the country, many in rural or low-income areas without internet access were left scrambling as classes went online. Equipping buses with Wi-Fi to help accommodate the online learning is a short-term solution to a much bigger problem. Beyond the transition to online learning to complete the school year, the social distancing in place to stem the transmission of the coronavirus has increased the use of communications services as Americans try to stay connected, and in turn highlighted the hardships for those who lack connectivity.

While few will be able to escape the resulting hardships of the current economic downturn, America’s most economically vulnerable communities — those where household finances were already unstable and work scarce — will be hit hardest by the recession currently underway. The Economic Innovation Group recently began a research initiative called the Neighborhood Poverty Project which tracks changes in the number and composition of metropolitan high-poverty neighborhoods from 1980 to 2018 with the primary goal of substantiating the idea that returning to the pre-crisis “normal” of national growth is not enough to lift America’s highest-poverty neighborhoods. The project finds that the number of neighborhoods in which 30 percent or more of the population lives in poverty doubled from 1980 to 2010.

A recent economic-impact study by Summit Consulting and the W.E. Upjohn Institute for Employment Research analyzed the overall effect of projects undertaken by the Manufacturing Extension Partnership (MEP) on the U.S. economy in FY 2019 and found that the investment of federal dollars into the MEP Centers yields, in the most conservative model, a return on investment of 13.4:1 (from the $140 million federal investment). The study also found that total employment in the U.S. was nearly 217,000 higher because of MEP Center projects. 

SBA began offering a second round of the Paycheck Protection Program (PPP) on April 27, and SBA’s data indicate this round is better distributed across businesses and the states than the first. As of May 8, round two has approved $189 billion across nearly 2.6 million loans, 55 percent more than in all of round one. The average loan size in round two is $73,488, which is a significant drop from the first round’s average of $206,022. Combined, $531 billion has been distributed in 4.2 million PPP loans.

Despite the national increase in loan approvals, 20 states have received fewer loans so far in round two. One reason that per-state award levels are diverging is that loan approvals are increasing on a per capita basis: from 5.0 loans per thousand in round one to 7.8 loans per thousand in round two.

The U.S. Cluster Mapping Portal has received a data refresh with updated cluster profiles and performance benchmarks for all U.S. regions. This free tool is useful for understanding regional composition of traded sectors and strengths, which could be especially beneficial in these challenging times as businesses attempt to restore their supply chains. The U.S. Cluster Mapping Project is a national economic initiative created by the Harvard Business School’s Institute for Strategy and Competitiveness that provides more than 50 million open data records on industry clusters and regional business environments in the U.S., enabling promotion of economic growth and national competitiveness.

As the economic fallout continues from the coronavirus pandemic and associated shutdown, states are still uncertain as to what their financial situations might be as they attempt to craft their new spending plans for a quickly approaching new fiscal year, which for most states start July 1. Last month, New Jersey state leaders took a unique approach to the situation by extending the current fiscal year from June 30 to September 30. The extension addresses a number of issues.

U.S. Secretary of Commerce Wilbur Ross today announced that the Department’s Economic Development Administration (EDA) is now accepting applications from eligible grantees for Coronavirus Aid, Relief, and Economic Security Act (CARES Act) supplemental funds (EDA CARES Act Recovery Assistance) intended to help communities prevent, prepare for, and respond to coronavirus.

Frontline workers in Michigan who don’t have a degree may find a tuition-free pathway to college or a technical certificate, in the same manner as the G.I. Bill following World War II, while others states are also pursuing options for increased educational opportunities for workers who have lost their jobs due to COVID-19.

Frontline workers in Michigan may have the opportunity to obtain a college degree or technical certificate if a proposal by Gov. Gretchen Whitmer is passed. The governor announced the initiative, called Futures for Frontliners, last week. It was inspired by the federal government’s G.I. Bill following World War II that enabled free tuition for soldiers returning from the war.

As college students close out highly disrupted spring semesters, higher education institutions across the country are trying to determine what the fall semester will entail, which has proven to be tricky at best. On campus or online instruction, hybrid plans and increased protections for students’ wellbeing are all topics administrators are grappling with in the midst of the pandemic. Meanwhile, prospective students are up in the air regarding their plans, as well, with a recent report revealing that domestic undergraduate enrollment for four-year institutions could decline 20 percent.

In early March, we shared that organizations who use a web address ending in .ORG should be aware that a management change could result in registration fees for domain names doubling. Late last week, the news broke that ICANN rejected the sale of the .ORG registry to private equity firm, Ethos Capital.

The U.S. Securities and Exchange Commission is implementing a rule that relaxes restrictions on crowdfunding through next February, according to a Federal Register notice published today. The net result of the temporary rule is to accelerate the timeline for a company to access capital through crowdfunding, at the expense of some public access and investor information.

Specific changes include: allowing companies to make offers before providing financial statements; financial statements will no longer require independent validation; and, sales can occur without holding the solicitation publicly for 21 days. Companies wishing to utilize these rules must qualify for crowdfunding and have been organized and in operation for at least six months before making the offering.