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How to Win in a Slow-Motion Road Race: Economist Stephen Fuller on the economic recovery
The following economic facts might surprise you:
• The U.S. is entering its 34th straight month of economic recovery.
• Our national economy is now larger now than it was in 2008, before the American housing bubble burst and the country lurched into recession.
• The economy is considerably more efficient now than it was in 2008: Workers are more productive, businesses are using technology to better advantage, and companies have jettisoned less profitable business areas.
• This year, the economy is expected to grow by 2.1 percent. In 2013, by 2.4 percent. And in 2014 by 3.4 percent. If this forecasted trajectory proves accurate, 2014 will see the creation of one million new jobs.
Dr. Stephen Fuller, a George Mason University economics professor and director of the Center for Regional Analysis, offered these facts as a kind of broad-stroke sketch in a recent interview on the shape of the U.S. economic recovery. The primary question for Fuller was what this slow but steady climb out of economic recession means for parks and recreation professionals. But before tackling that question, Fuller filled in the broad strokes of the current economic picture with a number of other telling details.
Slow-Motion Road Race
If our economy has been on a steady upward track for nearly three years, then why are we not witnessing the typical signs of prosperity and expansion? Signs like construction sites humming with activity, bidding wars on resale homes, and job hunters quickly finding employment. Mainly because this is a very unusual recovery, Fuller contends. First, the growth we have seen since 2008 has been unlike the construction-fueled growth that propelled the U.S. out of previous recessions.
“All sectors are growing, but none are leading,” he explains. “It’s like a road race where everybody is in slow motion. In a typical recovery the construction sector jumps out front and everything has to be manufactured and every finished house has to be furnished.” And all of that building and buying has powerful spillover effects.
Not so this time around.
Secondly, those who measure economic health by low unemployment figures will continue to be sorely disappointed. The “terrible” 8.2 percent unemployment rate will probably not drop back below 6 percent until around 2015. The reason for the lingering unemployment problems, Fuller says, is that “many of the jobs that were lost were actually destroyed. They’re gone. They’re no longer part of the economy, and the workers who held those jobs don’t qualify for the new jobs.”
So we have growth without a primary driver and a large population of unemployed workers who will not find work without retraining. “There’s just nobody pushing the economy.” Nonetheless, Fuller emphasizes, all sectors except government are now showing some recovery. And that recovery is about to accelerate.
Construction starts will soon kick in and become that missing economic driver. In the third quarter of 2011, Fuller relates, multi-family housing construction was positive—the first time in six years (“a really long time”) that residential construction investment contributed to the growth of the economy. “So we’re already seeing multi-family, and…the rest of the construction sector will turn positive over the course of .”
But it won’t happen all at once. Office and retail construction will lag behind residential, and it won’t happen evenly across the country, he cautions. “The construction sector doesn’t all get good at one time—it comes in by product type or by type of land use.” The important thing to remember, Fuller stresses, is that by the second half of 2013 we should see the entire construction sector expanding.
And, importantly, the resurgence of construction will mean revenue surpluses for many state and local governments by 2014. For most of those jurisdictions, Fuller adds, it will be the first surplus since 2007.
“For the first time at a national level since the recession, the public sector—state and local governments—will see revenues growing to the point that expenditures can start growing. And that will fuel the economy as well, and we’ll see more public construction—and schools and parks. First, [jurisdictions] will fix what’s broken—and then they’ll buy some new stuff.”
Unlike previous times of economic growth, this upcoming economic expansion will be a slow, gradual phenomenon. Growth will be, as Fuller puts it, “a little lumpy,” due to consumer caution. Before the 2008 bust, he explains, “people spent money and incurred debt with the assumption that they could easily pay it off. Well, they don’t think that way anymore.” Now they may spend on a new automobile—but not on an expensive vacation. People are eating at home more and going out to restaurants less. And they are cutting their own grass. “It’s interesting to watch discretionary spending,” Fuller says. “And it’s a healthy pattern actually.”
On the macro level, slow, ongoing growth without bubbles and distortions is also a healthy thing. “It may be more sustainable in the future,” Fuller reflects. “We need patience, though, because especially in the public sectors it’ll take a while before local governments become as generous as they were before. And they do need to be very careful in their borrowing.”
Advice for Parks and Rec Agencies
As the nation sits poised for accelerated growth, Fuller says, managers of public lands and services face a rich, unprecedented opportunity. They can position their agencies not only to thrive—but to drive their communities toward a new level of economic competitiveness. Fuller’s advice for parks and recreation leaders falls into two categories: strategic land acquisition and planning with an eye to attracting a skilled work force.
Land is never going to be cheaper than it is today, Fuller insists—so park and recreation directors should try to get out in front of the market. “Land has lost considerable value because of the housing bubble. So this would be a good time to acquire some of that land that you know you won’t be able to buy in five years.” He adds that in many metro areas, such as the Washington, D.C., region where he lives, “we’ve already hit that point where builders are buying up everything they can find so that they have enough land to build houses through 2017.”
But land acquisition, while a priority due to timing, is only one element of the broad strategic thinking Fuller urges park agencies to adopt. The resurgence of the economy over the next five to six years will coincide with Baby Boomers retiring and leaving the work force. According to the Bureau of Labor Statistics, we will have six million more jobs than workers by 2018. And if they want to make themselves magnets for economic development, towns and cities will be competing for the best of that labor pool. “I would argue,” Fuller says, “that communities that have a very well planned and diverse recreation and parks system are going to be viewed as communities that are progressive.”
And workers will choose, as they always do, to live in places that offer affordable housing, good neighborhoods, open spaces, and good facilities. “So I’d put that out there to local economic development people as well as local officials that preserving open space and having aggressive and visible programs and facilities sends a message, both to residents and to future business investors,” Fuller concludes.
Maureen Hannanis Senior Editor of Parks & Recreation.