Clayton-Matthews predicts potential for economic losses at outside summer events due to lingering fear from Boston marathon bombings
Economics? Biggest loss is yet to come, experts say
By Jack Minch and Jennifer Swift New Haven Register
The biggest economic impact to Friday’s lockdown of Greater Boston is yet to come, said Northeastern University economist and professor of public policy Alan Clayton-Matthews.
Dunkin’ Donuts shops were the only businesses with permission to open in Watertown, and residents throughout Greater Boston were urged to stay inside, so the region ground to a near-halt Friday.
In Boston the MBTA shut down and Bruins and Red Sox postponed their games.
Restaurants and universities were closed in response to the search for Boston Marathon bombing suspect Dzhokhar Tsarnaev.
It is difficult to tell the value of the economic loss, said Jon Hurst, president of Retailers Association of Massachusetts.
“Certainly it is hundreds of millions including retail, restaurants and lost office productivity,” he said in an email. “Could exceed a billion.”
Jim Fitzgerald, the owner of Fit-Z’s Bar and Grill on Main Street in Watertown, said Friday afternoon his bar is a place for people to hang out, but he planned to remain closed until told otherwise.
“Friday is the busiest day of the week for us,” Fitzgerald said. “My friends have called, different people have texted to see if we’re open. But I’m friends with cops, and they’ve told us it’s not a good idea to congregate.
“Friday’s are a busy day for us; so is the weekend, but it’s not worth the risk. Just in case.”
Most of the money lost to business in the short term can be made up, said Northeastern University economist and professor of public policy Alan Clayton-Matthews.
It isn’t unprecedented for businesses to close on workdays, economists said.
Blizzards forced similar closures during snowstorms this winter, said Clayton-Matthews and UMass Lowell Economics Department Chairman Professor Michael Carter.
“In terms of the effect on business this is similar, but since the weather is nicer I think the rebound effect will be stronger,” Carter said.
Many of the people who work in Boston have salaried positions, and hourly employees will get the opportunity to make up the lost hours for shoppers who delay their spending, Clayton-Matthews said.
Some businesses such as pushcart vendors or convenience stores won’t make up the business.
“That business is just gone,” Clayton-Matthews said.
It will be especially difficult for restaurants that cater to the lunchtime crowd, Carter said.
The bigger impact will be on attendance at outdoor events later this year, where fewer people may go to those events out of fear of the danger posed by being in crowds, Clayton-Matthews said.
“People do seem to want to respond to this by being not afraid and not being afraid to be out, but I still suspect there will be some kind of effect later this summer in public open places,” he said.
Businesses and municipalities are likely to start adding security.
The impact will be worldwide, Clayton-Matthews said.
Runners and spectators at the Virgin London Marathon can expect to see increased security Sunday, he said.
Deal, which could arrive in mid-November, would be for 130 cars totaling $352.3 million
A rail manufacturer based in Illinois is in the final rounds of bidding to build 130 high-speed passenger rail cars for use on Amtrak routes in Illinois, Michigan, Missouri and California.
The order would total $352.3 million.
The bid was submitted by Sumitomo Corp. of America and Nippon Sharyo U.S.A., which opened a $35 million passenger rail car plant in Rochelle in July.
The Rochelle plant is also making 160 “Highliner” rail cars for Metra Electric line customers in the Chicago area, as well as 12 diesel cars for California’s Sonoma-Marin Area Rail Transit, 18 cars for Metrolinx in Toronto and eight bilevel passenger cars for the Virginia Railway Express in Alexandria, Va.
Illinois officials hope the announcement helps attract more manufactures to the state, especially those involved in rail equipment. Gov. Pat Quinn said a deal, expected by mid-November following an audit by the Federal Railroad Administration, could mark a “historic beginning to increased rail equipment manufacturing, assembly and production in Illinois.”
Rochelle Mayor Chet Olson said the plant has sparked interest in the area. “We are already seeing an upside in businesses and other companies contacting us to look at the area and look at the logistics.”
To lure Nippon Sharyo to Rochelle, various governmental units including Rochelle ponied up about $11 million in incentives.
The state in 2010 offered an incentives package worth more than $4.7 million composed of training funds, grants and corporate income tax credits over 10 years. The Illinois Department of Transportation kicked in another $5.5 million to build a rail spur from the BNSF Railway main line to the new factory, and Rochelle offered $866,000 in incentives.
In return, Nippon Sharyo pledged to create at least 250 jobs in Illinois and to retain 15 workers from its office in Arlington Heights.
The rail cars will include wireless Internet access and must meet Buy America requirements, which allow companies to tap into federal incentives through states, municipalities or transit authorities. Under the requirements, companies have to produce 60 percent of the total value of the rail cars in the U.S. The final assembly must be done by American workers with American-produced steel, iron and manufactured components.
A spokesman for Nippon Sharyo said the company is excited about the project, but he declined to make further comment.
Most of the funding for the cars will come from Federal Railroad Administration grants totaling $808 million. A portion of that money will be used to fund high-performance diesel locomotives capable of sustaining 125 mph, and for making single-level passenger cars.
Existing Amtrak locomotives would be used initially to propel the new rail cars at speeds of up to 110 mph. The request for proposals to make the new locomotives is expected to take place by the end of the year.
“This is good use of federal money,” said Joan Fitzgerald, interim dean of the School of Public Policy and Urban Affairs at Northeastern University and co-author of the report, “Reviving the U.S. Rail and Transit Industry: Investments and Job Creation.”
The 2010 report said a $12 billion investment in rail vehicles and bus purchases would create more than 79,000 jobs. If the U.S. invested $37.2 billion — a level comparable to China’s investment in rail and bus vehicles — more than 250,000 jobs could be created, according to the report.
“You’ve got to start somewhere revitalizing passenger rail,” Fitzgerald said. “These are good manufacturing jobs.”
The cars are expected to be delivered between fall 2015 and early 2018. California will receive 42 rail cars. Illinois, Michigan, and Missouri will divide the remaining 88.
Tribune reporter Jon Hilkevitch contributed.
Joan Fitzgerald recently spoke on a panel at the Inner City Economic Summit, put on by the Initiative for a Competitive Inner City (ICIC).
“Cities across the country are creating innovative models and collaborative partnerships to lay the groundwork for sustainable economic development. By identifying industry strengths and then connecting capital, land use and business development strategies to these, city leaders can have a greater impact on their communities. At the same time, these strategies need a specific focus on the city’s most distressed areas in order to ensure that all city residents have a path to economic opportunity. What Works case studies along with groundbreaking research will equip participants with a framework to create accessible jobs and maximize investment in their cities.” – description from the Summit program
The theme of the panel was “What Works for Cities: Spotlight on Solutions. “City, civic and business leaders convene to share “what’s working” in their cities to promote job growth and sustainable economic development. Case studies will focus on three categories: city and anchor economic development initiatives; industry-led workforce development; and jobs and business creation in the food cluster. On-the-ground practitioners will present case studies and answer questions.”
Download a copy of Joan Fitzgerald’s powerpoint presentation.
By Matt Collette | news @ Northeastern | September 14, 2012
President Obama and Republican challenger Mitt Romney are rarely in the same place, either physically or politically. But on Wednesday, economic experts who have advised both men shared the stage to discuss the faltering global economy and the role of federal policy in addressing the crisis.
“At just about any point since the Second World War, the question was always quite clear and you knew what the problems was,” said former Harvard University president Larry Summers, an economist who headed the U.S. Treasury from 1999 to 2001 under President Bill Clinton and served as economic adviser for President Obama until 2010. “What stands out at this moment is that you can listen to a discussion of something like the deficit and there are two major cross-cutting themes.”
Summers and Romney’s economic adviser, Greg Mankiw, the former chair of President George W. Bush’s Council of Economic Advisers, discussed the economy on Wednesday evening as part of the Open Classroom series sponsored by the School of Public Policy and Urban Affairs. The lecture series — The 2012 Election: Policy Advice to the President — will be held every Wednesday from 6 to 8 p.m. in 20 West Village F throughout the semester and is open to the public.
Speaking to hundreds of attendees, Mankiw described the 2008 partisan debate over how to address the economic crisis. “The big question that plagued both parties was whether to stimulate the economy by cutting taxes or increasing spending,” he said.
Obama’s approach focused on government spending, Mankiw explained, while Republicans argued for tax cuts. The Republican approach, he said, would leave citizens with more money to spend, bolstering the economy from within.
Summers, on the other hand, argued that it’s more important for the government to spend money than address the deficit over the short term because the private sector has been “some combination of unwilling and unable to spend and lend.”
Government spending, he added, is the only way to stimulate enough demand to address the challenges of “a deeply depressed stuck economy.”
Mankiw and Summers agreed that a solution rooted entirely in either spending or in tax cuts would be neither beneficial nor sustainable. Any attempt to address the nation’s economic woes, they said, must be multifaceted.
Mankiw explained that fiscal policy should aim to “broaden the base and lower rates,” a standard conservative approach. But he also advocated for raising the retirement age, which he said would reduce the burden on entitlement programs such as Social Security and Medicare.
“That’s something that polls much better among economists than the general public,” joked Mankiw. Earlier in the evening, he noted that while he is a Romney adviser, “at times I think it will be clear that I’m expressing an opinion that only a tenured professor could.”
Michael Dukakis, the former Massachusetts governor and current Distinguished Professor of Political Science at Northeastern, moderated Wednesday’s event.
He said it was a privilege to have both Mankiw and Summers on campus. “It’s a great opportunity to have both these men address what is clearly the most important issue of the campaigns,” Dukakis said.
Summers advised his 1988 presidential campaign, Dukakis noted, but then joked, “He was a very good economic adviser — that’s not why I lost.”
By Megan Woolhouse | The Boston Globe | August 17, 2012
Massachusetts’ unemployment rate ticked up slightly in July as the state’s economy continued to slow last month, adding just 1,600 jobs, the Massachusetts Executive Office of Labor and Workforce Development reported Thursday.
The state’s unemployment rate rose to 6.1 percent, from 6 percent in June, the first increase since October 2009. The state jobless rate, however, remains well below the national average, which also rose slightly in July, to 8.3 percent.
“It looks like both the state and the nation are growing slowly,” said Northeastern University economics professor Alan Clayton-Matthews. “This was expected given the conditions in the world.”
The debt crisis in Europe and an economic slowdown in China, combined with concerns about how the US Congress will resolve the federal budget stalemate have fueled a climate of uncertainty among businesses and consumers. Those unknowns — with presidential election approaching — appear to have weighed heavily on employers, who have reined in expansion and hiring.
Massachusetts’ economic health is more heavily dependent on trade with Europe than the nation. About 40 percent of the state’s exports go to the European market, compared to about 20 percent nationally.
Job growth in the state has slowed considerably after strong gains in the beginning of the year. In the first three months of the year, Massachusetts employers added an average of 9,500 jobs a month; over the past three months, job gains have averaged just 2,400 a month, according to state employment statistics.
The state’s economic recovery has also been uneven among professions and the state’s various regions. Communities in Western Massachusetts still have some of the highest unemployment rates in the state, while the state’s high-tech industry closer to Boston continued to grow, said Michael Goodman, a professor of public policy at the University of Massachusetts at Dartmouth.
In Cambridge, for example, the most recent unemployment rate was 4.2 percent; in Springfield, the jobless rate was 10.3 percent, according to state figures.
“In Massachusetts, the divergent trajectories of the white-collar and blue-collar economies continues,” Goodman said.
Job gains in July were led by education and health services sector, which added 4,000 jobs, and the professional scientific and business services, which includes technology and technical firms, lawyers, and consultants. That sector added 1,000 jobs.
Massachusetts’ construction sector gained 900 jobs in July, but remains far from recovering from the last recession, which hit the industry particularly hard. In the past year alone, the sector has lost 3,900 jobs.
Government employers gained 500 jobs last month. State government added 600 jobs and the federal government 100.
Those gains were offset by the loss of 200 jobs in local government. Over the year, government employers have shed 2,900 positions.
Manufacturing in Massachusetts held steady, gaining just 100 jobs over the month. So far this year, the sector has lost about 3,900 jobs.
The state’s leisure and hospitality industries lost 1,600 jobs in July. Over the year, the sector has showed modest gains of just 600 jobs.
Trade, transportation, and utilities lost about 1,100 jobs, though the sector has added 8,900 jobs over the year.
Financial services lost 1,000 jobs last month. Job growth in the sectors is flat for the year.