Perception of federal government policies improved slightly, but a majority of economic developers (58%) still believe federal policies are currently poor.  According to the survey respondents, the best policies for today’s economy are decreasing regulation, job creation incentives, reducing government and/or taxes, tax reform, and entrepreneurship incentives.  Economic developers also called for a renewed focus on manufacturing and the policies required to bring the industry back to the U.S.

The survey also asks respondents to indicate whether their prospect activity increased, decreased, or stayed the same in the second half of 2011 versus the first half (see a definition of prospect activity at the end of this release).  Fifty percent (50%) of economic developers indicated an increase in prospect activity, which is a slight decrease from the previous survey.  This reflects a moderating rate of prospect growth as activity returns to its pre-recession levels.  Although the upward trend of strong growth has reversed, the gap between announcements and leads has shrunk as more projects come to fruition.  Project size continues its upward trend, as 44% of economic developers said their average project size increased in terms of square footage, investment, jobs, and payroll.  The top 5 industries showing the most improvement in prospect activity industry in the second half of 2011 were: Manufacturing, Health Care Services, Clean Energy, Distribution, and Food Processing.

Definition of Prospect Activity

Prospects are companies that are considering an expansion/relocation and are competitively evaluating multiple cities as part of their decision.  Economic development organizations often assist these companies with their information needs, site and building search, workforce assessments, and/or financing and incentives.  Prospects are flagged as various types as they move through the decision process:

• Lead – A company makes an initial request for information or indicates that an expansion/relocation decision process has begun.
• Prospect – A formal “Request for Proposals” is usually sent, which includes the requirements for the project expansion/relocation.
• Visit – A community is short-listed and company representatives visit multiple communities to gather and confirm information.
• Announcement – A company makes a decision and issues a public statement announcing the winning community for the company’s expansion/relocation.

The survey also asks economic developers to indicate whether “Startups/Ventures” and “Closures/Layoffs” increased or decreased.

The Economic Developers Index is a bi-annual survey of U.S. economic developers to gauge changes in prospect activity and perceptions of the economy.  While other surveys exist to measure sentiment of businesses or consumers, this survey is focused on economic developers, who have unique insights on the future of job creation in U.S. communities.

In January 2012, about 190 qualified responses were collected for the survey, which was the 6^th consecutive survey conducted.  The survey is done by Avalanche Consulting as a free service to the economic development community.  Only survey respondents and the media are provided copies of the complete report.

http://www.EconomicDevelopersIndex.com

Click here to download the complete report

New analysis by Avalanche Consulting, a national economic planning firm, reveals that the “true” rate of unemployment is 12.1% – 3.6 percentage points higher than reported last Friday – and that an additional 5.4 million unemployed discouraged workers are missing from federal labor force estimates.  This is the first recession in decades to experience the phenomenon of large swaths of people choosing to leave the labor force.

These estimates are derived by using the long-term ratio of employment to working-age population to calculate the “right” level of employment and the level of “true unemployment”. The team at Avalanche Consulting pulled 20 years of labor force and population data from our proprietary Headlight data system, which uses data from numerous federal agencies.

Major Findings:

• The labor force and unemployment rate estimates published by the US Department of Labor depend on the number of people who say they want a job and are looking for one.  Because discouraged workers who stopped looking for jobs aren’t included in the labor force (and are hard to measure), the reported unemployment rate may not tell the true unemployment story for the US.

• The labor force participation rate is one measure that is typically used to show the natural rate of employment in the US.  The labor force participation rate (available workers as a % of the population aged 16 or higher) peaked in 1997 at 67.2%, but has experienced a slow decline over the past decade.

• To determine the right level of employment (and unemployment) for the US economy, we use a better measure:  the ratio of jobs per population of working age (25-64 years).  Using this ratio (which has held more constant than any other over the last 20 years), the actual gap in jobs in the US economy yields 18.7 million unemployed persons with a true unemployment rate of 12.1%.  This is 5.4 million persons and 3.6 percentage points higher than reported.

• Our unemployment rate estimate is not like the alternative measures of unemployment reported by the Department of Labor, which includes people who work part-time but want full-time work, discouraged workers, and people who are “marginally attached” to the labor force.  Unfortunately, these measures don’t vary much from their long-term averages (multiples above the reported rate) whether we are in a recession or not.

• Because we compare employment to population, we believe that our current unemployment data provides a clearer estimate of the number of discouraged workers, and therefore actual unemployment in the US today.

All supporting charts and data can be found in the downloadable Economic Brief on the Avalanche Consulting website.

What is the outlook for 2012?  “Understanding the past and present situation is critical so that we can make better decisions going forward”, said Chris Engle, Vice President of Avalanche Consulting.  “Sizing up the economy affects decisions across every part of the US: government policy decisions, career planning decisions, investment decisions, and overall consumer sentiment.  The outlook for 2012 is getting brighter:  most indicators are trending in the right direction.  However, we must recognize that the economy has been scarred and that millions of people are no longer part of the productive labor force.“

“Every level of government – federal, state, and local – must be geared toward accelerating the recovery given lower levels of labor force participation and a large disenfranchised worker base,” said Mr. Engle.  “Policies could include creating the business climate and incentives for the private sector to create jobs, encouraging adult workers to retrain in high-demand skills, and ensuring students are ready for the workforce when they graduate.  The rewards will be large with the right policies:  our job growth rate could be twice our long-term rate once the economy gets in full swing if we set the proper foundation for the private sector to create jobs.”

Avalanche Consulting is one of the nation’s leading economic development consultancies specializing in economic and workforce development, strategic planning, target industry analysis, workforce demand assessments, and marketing plans.  Learn more at: http://www.AvalancheConsulting.com

Headlight is the Avalanche Consulting’s flagship product, a web-based dashboard that provides businesses, workers, students, and citizens with in-depth, continuously updated information on their local economy.  Learn more at http://www.HeadlightLLC.com

The U.S. economy has experienced positive growth every month for the last 12 months, a very encouraging sign.  However, month-to-month growth rates have been consistently low:  the U.S. employment base grew just 1.1% over the past 12 months.  While growth has appeared slow but steady for the nation, the recovery has been far from uniform across metros in the U.S.  A surprising finding in our analysis is that 43% of all metros experienced job losses during the Summer of 2011.  These job losses were most pronounced in small metros (under 500,000 population), but were consistent across all size categories.  Thirty-five percent of large metros (1.5M population or higher) lost jobs and 41% of medium-sized metros lost jobs.  [Note:  data used in the analysis were seasonally adjusted.]

Headlight’s “Best Performing Metros, Summer 2011” (in order, representing the top 10% of their size category) are:

Large metros (out of 46 large metros):

1. Riverside-San Bernardino-Ontario, CA
2. Kansas City, MO-KS
3. Tampa-St. Petersburg-Clearwater, FL
4. Phoenix-Mesa-Glendale, AZ

Medium metros (out of 71):

1. Cape Coral-Fort Myers, FL
2. Tucson, AZ
3. Stockton, CA
4. Gary, IN
5. Boise City-Nampa, ID
6. Modesto, CA
7. Honolulu, HI

Small metros (out of 269):

1. Cumberland, MD-WV
2. Lewiston-Auburn, ME
3. Holland-Grand Haven, MI
4. Hot Springs, AR
5. Wenatchee-East Wenatchee, WA
6. Columbia, MO
7. Yuba City, CA
8. Blacksburg-Christiansburg-Radford, VA
9. State College, PA
10. Odessa, TX
11. Lawrence, KS
12. Longview, WA
13. Hanford-Corcoran, CA
14. Lafayette, IN
15. Casper, WY
16. Lafayette, LA
17. Hattiesburg, MS
18. Redding, CA
19. Logan, UT-ID
20. Pocatello, ID
21. Houma-Bayou Cane-Thibodaux, LA
22. Mount Vernon-Anacortes, WA
23. Fairbanks, AK
24. Canton-Massillon, OH
25. Napa, CA
26. Santa Cruz-Watsonville, CA
27. Grand Junction, CO
28. Pittsfield, MA

Despite the positive stories of recovering metros across the U.S., a high percentage of metros experienced job losses in the Summer of 2011.  Out of the 386 metros examined in this report, 43% of metros were in recession this summer.  Large metros fared better, but job losses were spread rather evenly across all size categories.  Small metros experienced the most severe negative growth rates, but the worst performing medium metros fared better than their larger counterparts.

Some interesting variations between size classes are appearing.  We decided to analyze the growth statistics for each size of metro across four percentiles:  the first 25^th, then the next 25^th, etc.  Our hope was to determine if there is a “right-size” for regions as the U.S. pulls out of recovery.  This thought process is similar to one used by financial planners who recommend “big cap” or “small cap” stocks for investment during different stages of the business cycle.

As shown in the chart below, small metros have sizeable growth rates at both ends of the spectrum.  This is to be expected given the larger number of small metros and the lack of depth and diversification of their local economies.  However, when we contrast medium metros with large metros (more of an “apples-to-apples” comparison), large metros performed better overall, with smaller declines in the bottom quartile and a positive average growth rate in the 3^rd quartile, where medium metros lost jobs on average.  However, in the “high performance” quartile (top 25%), medium metros outpaced large metros.

Source:  Headlight, LLC

Click here to download the complete report.

Download the complete rankings by size category:

Complete Rankings for Large Metros (1.5M+)
Complete Rankings for Medium Metros (500k-1.5M)
Complete Rankings for Small Metros (<500k)

Subscribers to our e-newsletter can email us to get the full rankings as a spreadsheet.  Email Noelle@HeadlightLLC.com with this request.