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NACo releases study on county economic recovery patterns

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As the president prepares to deliver the State of the Union and talk about the state of the U.S. economy and national priorities, NACo released County Tracker 2013: On the Path to Recovery, an analysis of the recovery patterns across the 3,069 county economies in 2013. The dynamics within county economies affect the capacity of counties to deliver services and meet their financial obligations.

The County Tracker analyzes the annual changes of four economic performance indicators economic output (GDP), employment, unemployment rates and home prices during the recession, recovery and 2012 2013 period across the 3,069 county economies.

The focus of the report is on the county economy and not on the county government. County economies are the building blocks of regional economies (metropolitan areas and micropolitan areas), states and the nation. County governments ensure the functioning of these fundamental units of the U.S. economy by building and maintaining basic infrastructure assets, keeping communities healthy and safe and providing the social safety net for those in need.

Looking back, 2013 was a year of growth, but the recovery remains fragile. By 2013, the economic output (GDP) in about half of all county economies recovered or did not decline over the last decade. Home prices were in the same situation. But this is only part of the story. Jobs recovered in one quarter of county economies, and unemployment is back to pre-recession levels in only 54 county economies. The low unemployment recovery rates show the fragility of the recovery.

The recovery has also been uneven. All counties large, mid-sized or small have been affected by the recession but the patterns of recovery vary significantly.

Large county economies in counties with more than 500,000 residents were at the core of the recession and recovery. Looking at the jobs gains and losses over the last decade, more than half of the jobs lost during the recession between 2007 and 2010 were in large county economies, but also the majority of the jobs gained during the recovery were found in large county economies.

Large county economies in the South such as in Tarrant County, Texas bounced back quickly.

COUNTYTRACKER.jpg "While blessed with an economic diversity that enabled us to withstand the national recession better than other areas of the country, we were most impressed with the resilience of Tarrant County's manufacturing and housing sectors, which allowed them to respond quicker to developing opportunities," said Roy Brooks, commissioner, Tarrant County and NACo Large Urban County Caucus (LUCC) chair.

Employment in medium-sized county economies was more stable during the recession, but had a mixed record in 2013. About half of medium-sized county economies in counties with populations between 50,000 and 500,000 residents had shorter or shallower job recessions than the national average, more than any other group of county economies. Linn County, Iowa has one of these mid-sized county economies. "One of the factors that helped stabilize Linn County's economy through the recession was the amount of post-flood construction and revitalization that took place" said NACo President Linda Langston, Linn County supervisor. "Nearly one billion dollars was reinvested throughout our community from federal, state, local and private sources in the five years since the flood. Linn County also has the benefit of the value-added Ag industry and expanding new start-up businesses that helped to fully restore us to pre-recession levels."

Small county economies in counties with fewer than 50,000 residents evidenced the entire range of recovery outcomes. The only county economy in the country that had no recession based on all four indicators analyzed in the study was Mountrail County, a small county in North Dakota. The oil industry powered the growth in this small county economy.

Another 26 small county economies experienced no declines on some economic indicators or fully recovered across all four indicators by 2013. However, most small county economies recovered on only one indicator out of the four analyzed, usually home prices. The housing boom and bust affected small county economies to a lesser extent than the rest of the country.

This fragile and uneven recovery across county economies adds to the challenges that counties face currently. Most counties survived through the recession because of their fiscally prudent approaches.

"Los Angeles County would not have weathered the recession as strongly as we did without our focus on fiscal prudency, as well as the partnerships we have with our labor unions, who have foregone cost-of-living increases to avoid furloughs and layoffs," said Los Angeles County Board of Supervisors Chairman Don Knabe, a member of the NACo Large Urban County Caucus (LUCC).

"Our frugality has paid off through the rough economic times. Nevertheless, as we see improvements, we must remain disciplined and continue to operate within our means."

Counties with fast-growing economies, such as Mountrail County have had a hard time keeping up with the necessary service delivery. "The fast growth that Mountrail County experienced for the last several years has been great with jobs, but tough on the county's infrastructure and on the county's residents on fixed incomes," said Commissioner Greg Boschee.

Other counties, with challenged economies are finding new ways to maintain services and prepare their counties for the future, said Matthew McConnell, commissioner, Mercer County, Pa.

"Trying to run county government in a contracting economy and declining population base has its challenges," he explained. But similar to running a business, if you are successful at making your organization as efficient as possible in delivering quality goods or services in trying times, you prepare your organization for greater success during more favorable times."

In addition to their economy situations, all counties face a triple threat from the uncertainty around major federal policy changes, from tax reform, entitlement reform and appropriation cuts that are not accompanied by cuts in unfunded mandates and federal regulations.

"The national economic numbers mask the growth patterns on the ground," said Matt Chase, NACo executive director. "The County Tracker offers a reminder that the U.S. economy happens on the ground, in the 3,069 county economies that provide the basis for county governments.

"As fiscal tightening continues to limit the scope of state and federal investment, it is becoming imperative for states and the federal government to work with counties to maintain the fundamentals of the U.S. economy county economies."

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About Dr. Emilia Istrate (Full Bio)

Managing Director, NACo Counties Futures Lab

As NACo Counties Future Lab managing director, Emilia Istrate leads policy analysis, analytics and knowledge sharing efforts, as well as thought leadership to support and advance the interests of county governments. She is part of NACo’s executive leadership team.