Muni Commentary

According to just released DIVER Geo Scores from Lumesis, Washington, DC continues to be the top state-level location in the US for the month of March. DC held the same distinction a year ago. The District has a Geo Score of 10, the highest score, which is based on multiple, meaningful economic and demographic datapoints from the employment, income and housing categories. DIVER Geo Scores are relative scores designed to quickly communicate the overall economic health of a selected geographic area on a scale of 0 to 10. Rounding out the top 5 for the month are North Dakota (9.8), New Hampshire (9.6), Colorado (9.4) and Massachusetts (9.2)

The Geo Scores also looks at cities and counties. While the State of California ranks 16th with an overall score of 7, the top three performing counties last month are in California: San Mateo, Santa Clara and San Francisco, all with rankings of 10. Some of the State's cities are very strong performers as well.

 This week we are going to dive deeper into a discussion of housing price trends and what a shift could mean for local governments’ finances. I wanted to start with and expand upon a comment that Gregg Bienstock made in his commentary on our November Geo Score update:

 “Among counties with the greatest decline in their Geo Score over the past year, many saw relatively decent unemployment results, but Big Horn, MT saw a significant jump in its unemployment rate. All but Warren, NJ, Big Horn, MT and Burlington, NJ also saw a decline in their labor force participation. Housing was a mixed bag, with all but Big Horn, MT seeing a rise in the foreclosure rate while all but Tazewell, IL saw rising housing prices (yes, I am still concerned about the seemingly endless rise in housing prices).”  (Emphasis mine.)

 This week we bring you the June 2017 DIVER Geo Scores and a look at population data for the 18-64 age group, aka the “working age group.” The numbers for the “working age group” may surprise (or concern) you.

DIVER Geo Scores are a measure of the overall economic health of a selected geographic area on a scale of 0 to 10. The Geo Score reflects the relative economic well-being of the location and is available for all States, counties, and 350 of the largest cities. Calculations are released monthly and are based on multiple, meaningful economic and demographic data from the employment, income and housing categories.

Last week, while everyone else was distracted by the NBA Finals, the Stanley Cup and James Comey, the rest of us in Muniland were on the edge of our seats during President Trump’s “Infrastructure Week.” During the campaign, President Trump proposed a $1 trillion plan to repair the nation’s infrastructure. Five months into his presidency, and having as many major legislative achievements as Patrick Ewing has championship rings,[1] we thought “Infrastructure Week” would be a great chance for the President to offer more details on the one issue with bipartisan support in Washington these days.

 This week we cover two topics – Weekly Earnings, looking at the haves and have nots, and Pension Obligations and Liabilities. Alex Pendolino guides us through the Weekly Earnings with insightful analysis. We then offer a few quotes and a link to a commentary prepared by John Mauldin.

This week we bring you the March 2017 DIVER Geo Scores and take a look at housing at the State level. Given some of what we articulate below, expect to see a bit more on housing in the coming month.

 DIVER Geo Scores are designed to quickly communicate the overall economic health of a selected geographic area on a scale of 0 to 10. The Geo Score reflects the relative economic well-being of the location and is available for all States, counties, and approximately 350 of the largest cities. Calculations are released monthly and are based on multiple, meaningful economic and demographic data from the employment, income and housing categories.

As March Madness 2017 predictions abounded, so too did predictions about the timing of the next increase in the Fed Funds rate and how many would take place over the course of 2017. The increase in the Fed Funds rate by 25bps on March 15 was of little surprise – less surprising, perhaps, than the eye-popping stats of Gonzaga’s ability to keep possession of the ball or some of the upsets!

 With so much attention on job growth from both the outgoing and new administrations, we thought it would be interesting to take a look at what the data, through the end of 2016, tells us about the employment situation relative to our population. Unlike politicians, we do not seek to cast credit or blame, nor do we seek to see if one party or the other is offering “alternative facts.” Our objective is to offer some observations that can be relevant to those focused on the municipal bond market, and how changes to our population and employment situation may impact municipal credits. As for conclusions, as with our politicians, it is up to you to decide which data points and combinations thereof provide you with the “real” vs. “alternative” facts. I do offer some of my perspective throughout. Due to the number of tables, this commentary will print a bit longer than usual.