By many indicators, the United States economy is recovering from the calamitous financial meltdown of the late 2000s.
Key industrial sectors are gathering steam. Housing starts are up and prices of existing homes are on the rise. Major stock market indices are climbing. The auto industry has come roaring back.
Of the $608 billion the federal government loaned to distressed businesses in Troubled Asset Recovery Fund spending and in the rescues of Fannie Mae and Freddie Mac, some $371 billion has been returned. When coupled with interest earned on the funds returned, only $53.9 billion remains outstanding, or 8.7 percent of the principal amount expended.
The federal deficit is also in steep decline. The Congressional Budget Office anticipates that the government will actually run a surplus for the month of September and will end the fiscal year with a deficit of $642 billion, the first annual deficit under $1 trillion in more than five years.
In the big picture, then, the economy is gaining strength; corporate reports and government statistics confirm increased earnings, increased tax revenues, increased consumer spending (at least in some sectors) and a general sense that the worst is over.
Of course, the elephant in the room is unemployment.
The unemployment rate remains stubbornly high, and credit is disturbingly tight. Employers are reluctant to add to their payrolls, and corporate borrowing and bank lending continue to be constrained.
It’s not quite clear just what will encourage employers to take the plunge and add more jobs, but Richard Florida, an urban studies scholar best known for his work on the creative economy, writes in the October issue of Atlantic Monthly that interesting pockets of high-growth, higher-wage jobs are emerging in an intriguing pair of industry pillars: centers of knowledge and ideas, and clusters of energy production.
Florida notes first that America’s “knowledge metros” make up the biggest group of winners, in terms of the creation of high-wage jobs, of all cities and regions when it comes to post-crisis gains. A handful of these knowledge metros have an overwhelming lead in generating jobs paying more than $21 per hour. These metros include San Jose and San Francisco, Calif., Portland, Ore., and Austin, Texas.
College towns like Boulder, Colo., Charlottesville, Va., Champaign-Urbana, Ill., and Lawrence, Kan., are among the nation’s leading centers for start-ups, on a per-capita basis.
Florida concludes that, overall, knowledge is what allows metros to generate these good, high-wage jobs. Successful regional knowledge communities are characterized by a larger-than-average share of adults who are college graduates; a comparatively high proportion of the workforce in professional, technical and creative jobs, and the level of innovation and venture-capital investments present.
As an indicator, Florida points out that in 2011, knowledge metros stretching from Washington, D.C., to Boston produced $2.5 trillion in economic output, more than all of the United Kingdom or Brazil.
Also worth noting is a shift in America’s energy topography: the rise of an enormous and emerging “energy belt” bounded by Houston, Oklahoma City and New Orleans. This region produced $750 billion in economic output in 2011, more than all of Switzerland or Sweden. Jobs created in the energy sector have been impressively balanced, with 24 percent of job growth in Houston, for example, comprised of high-wage jobs ($21 per hour or more), 48 percent in mid-range jobs paying $14-$21 per hour, and 27 percent below $14 per hour.
There’s a lot to digest in Florida’s latest examination of the nation’s economic landscape, but it’s difficult to look at the concentrations of economic activity, job growth and, in particular, high-wage job growth, and not conclude that building a knowledge-driven economy will be absolutely critical for many, many metros.
Energy development, particularly fossil fuel extraction and transport, creates its own set of economic impacts, often right alongside environmental concerns. Some communities are comfortable balancing the scales to accommodate a robust energy economy. Others, however, will not be, and many more simply do not have the natural resources to get in the game in the first place.
For these communities, and indeed for the majority of individuals seeking at least some protection against another economic crisis, a solid education, well-funded universities, top-shelf research centers, creative hubs and other magnets likely to attract and retain talent must be a part of the foundation upon which a sustainable future can be built.
Perry B. Newman is a South Portland resident and president of Atlantica Group, an international business consulting firm based in Portland, with clients in North America, Israel and Europe. He is also chairman of the Maine District Export Council. His website is perrybnewman.com/.