Economic Development

by David Knight

How is the economy doing today? The Federal Reserve lowered the cost of money another quarter point for the second time in three weeks, and the market soared 330 points to close at 8,299. Many people believe that growing caution by lenders and unsettled conditions in financial markets drove the latest decision to lower the rate again. There seems to be growing concern over a move toward a recession. The fact that the Federal Reserve lowered rates again is a clear sign of growing concern over the economy.

America Online has gone so far as to poll members on how they feel about the potential of an economic recession. When I took the poll, 7,300 people had responded. My first response was "Wow, the power of the Internet." AOL can get more people to respond to a little opinion poll than we can get out to vote for our local elected officials. Of the respondents, 54 percent felt the stock market would be about the same or slightly higher (5 percent to 10 percent) over the next three months. Response to concerns over a recession received: 20 percent very concerned; 42 percent somewhat; and 38 percent did not believe we are headed for a recession.

According to Brian Fogle, of NationsBank, the economic fundamentals are still in place to support a healthy economy. We are still enjoying low inflation and interest rates. Recessions are generally proceeded with swift changes in inflation and interest rates. Fortunately, I was not of age to suffer through the Jimmy Carter years of up to 21 percent interest rates. I have heard many stories of how those times shaped the way many people apply their business practices today. If we never see those days again, we will all be better off.

The huge drag on trade from the Asian market decline could impact us, and some surveys are seeing a slight dip in consumer confidence. This is why the action taken by the Federal Reserve makes sense and should be a sign that all is not well in the world markets, and soon we will feel the effects here in the United States. Springfield has always found a way to continue to prosper regardless of how the rest of the nation, and the world, is doing. Springfield's economic diversity and success at growing industries that prosper in good times and bad is a great credit to the business leaders of our community.

Business leaders must continue to be aggressive in growing their industry, and in turn growing our local economy. We are fortunate that our local economic indicators have remained strong. Unemployment continues to be at a historic low of 3 percent. Production numbers for August are up over last year, with considerable growth in hours producing durable goods. Average weekly earnings for production of durable goods is up 8 percent over last year. This has tremendous direct and indirect economic impact on our community.

In the construction industry, local development numbers show an 11.3 percent increase in residential activity and a permit valuation of $71.2 million. Non-residential activity is on target to meet or exceed last year's numbers. To date, non-residential activity has a valuation of $44.7 million.

In my next column, retail numbers should be available to give us a clue as to where our local economy is heading. I would welcome your input and comments relating to the national or local area economy. I can be reached at

dkni@brpae.com.

(David Knight works in planning and development for Butler, Rosenbury & Partners.)[[In-content Ad]]