Tag Archives: Mid Atlantic

Where’s the growth?

In a famous Wendy’s commercial from 1984, three elderly women are examining a hamburger with a rather large bun when one of them asks “Where’s the beef?” in order to express her disappointment that the burger is all bun and no meat. When it comes to the economy growth is like the beef of a burger – without it all you’re left with is fluff and filler.

For the last 8 years the US economy has been mostly fluff and filler. Sure unemployment is down, but that is largely due to a lower labor force participation rate. Wage growth has been anemic and total GDP growth remains below the pre-recession long-run average of 3%.  GDP per capita growth is weak too.

Within a country as large as the US different regions are going to have different levels of GDP per capita and different growth rates for a variety of reasons including labor force characteristics, industry composition, weather, and geography. In order to examine the differences across the US, the graph below depicts the natural log of real GDP per capita in 2009 dollars for the 9 census divisions from 2001 to 2014. Because the natural log is on the y-axis the slope of the line corresponds to the growth rate between years. The black line is the US Metropolitan Area average and does not include rural areas.

ln real per cap gdp by cen div 2001-14

I created the census division average by generating a population weighted average of the real per capita GDP of the Metropolitan Statistical Areas located in each division. The weights are adjusted for each year in the data. Also, since the averages discussed in this post do not include rural areas one can think of them as the urban average in each census division. The population data for the weights and the real GDP per capita data are from the BEA.

As shown in the graph, the highest average real GDP per capita is in the New England division (orange) while the lowest is in the East South Central (purple), although as of 2014 the Mountain is not far ahead.

The slopes of the lines are steeper on average prior to the recession, indicating that the regions were growing faster during the pre-recession period. This is particularly noticeable in the Mountain and South Atlantic division, where real GDP per capita growth has essentially been zero (flat line) since 2009. Growth has also slowed considerably in the Pacific division (dark blue). Only in the East North Central (yellow) and West South Central (brown) does it appear that growth has reached or eclipsed its pre-recession rate.

The next graph below shows the average real per capita GDP by census division in three separate years – 2001, 2007, and 2014. This makes it easier to see the changes in levels over time.

real per cap gdp by cen div 2001,07,14

Real GDP per capita was higher in 2014 than in 2007 (year prior to the recession) in only three divisions – the Mid Atlantic, West North Central, and West South Central. The rest of the country has experienced either no gain or a decrease in the case of the South Atlantic and Mountain divisions. Together these graphs are hardly evidence of a strong economy.

High per capita GDP is not a perfect measure of economic prosperity but it is strongly correlated with many of the other things people care about. Countries with a higher level of per capita GDP are healthier, freer, and happier. The data presented here show that the US economy is struggling when it comes to growth, especially in the South Atlantic and Mountain divisions where people have become worse off on average. Whoever the next president is, he or she needs to come up with an answer to the question – Where’s the growth?

 

Sidewalk Accountability and Parking Property Rights

While the latest installment of DC’s record-breaking winter snow has passed over the area, the mountains of snow lining streets and piled on sidewalks appear to be here to stay for the time being. These problems, unusual this far south, are testing residents’ patience with their neighbors.

DC law states that residents are responsible for clearing the snow from sidewalks on their property, but the monumental task that this poses after two major storms has left some unwilling or unable to face up to the task.  The Washington Post discusses the problem:

It was fully 48 hours since the flakes of Snowmageddon had ceased falling, but by midday Monday, many residents and merchants in Adams Morgan still had not cleared their portions of public walkways, disregarding the District’s law mandating that property owners clear snow and ice from their sidewalks within eight hours after the snowfall’s completion.

Through the Mid-Atlantic, rules regarding sidewalk shoveling vary from the mere expectation of courtesy to fines up to $100 for homeowners and business owners who do not do the right thing.  While these municipal rules vary in how well they encourage citizens to maintain sidewalks, this issue might be better dealt with at a neighborhood rather than a city level.

In Understanding Institutional Diversity, Nobel Laureate Elinor Ostrom examines community-based efforts for solving collective action problems like sidewalks covered in snow. She suggests that shunning can be very effective in encouraging community members to follow rules. Imagine being publicly embarrassed at a neighborhood meeting for failing to shovel your walks in a timely manner.

Robert Nelson of the Mercatus Center explains in Private Neighborhoods and the Transformation of Local Government that the rise of private Neighborhood Associations is helping localities deal more effectively with such collective action problems.  

In another snow-related economic conundrum, vehicle owners struggle to protect their rights to parking spaces that they have laboriously shoveled.  In Boston, drivers can legally save their cleaned spots with lawn chairs or cones, but no such official rule exists in DC. However, an unscientific Washington Post poll found that 76% of respondents favored the right to reserve parking spots, effectively suggesting that the effort of shoveling is worth a guarantee of property rights.