I recently sat in on a conference call conducted by the Federal Reserve Bank of St. Louis. The focus of this session was to explore economic data during these troubling times, with a handful of economists forecasting what the future might look like. These professional inputs had me extremely pumped and optimistic about what the future might hold, economically, for our area, region, and country.
As General Mills© executive Liz Mascolo recently shared about optimism, “…it does mean that you have the ability to look at a situation and while it might be tough, you’re able to see around that corner and see possibility…versus the difficulty.” The Federal Reserve’s feedback and my own ongoing research has me bullish about our future.
Our national unemployment rate has climbed past 38 million, however, the number of new claims in recent weeks continues to decline. This 15% level – the highest since the Great Depression – is a far cry from February, when we sat at 3.5% unemployment. The industries hardest hit by COVID-19 are retail, leisure-hospitality, and food service.
However, the majority of these claims are classified as “temporary.” In other words, there are plans in place to bring these people back into the workforce.
Collierville has historically fared better than national unemployment numbers, pointing to the “recession-proofness” of our community. In early 2010, when national unemployment numbers were about 10%, Collierville’s unemployment rate was 6.5%. Before COVID-19 hit, Collierville’s labor participation rate (the percentage of working-age people working) was pushing 70%, while national rates were around 60%.
Pace of Recovery
The second half of 2020 should be better economically, according to the Federal Reserve Bank. Of course, these are only projections and predictions but various economic indicators point us in this direction. For example, Starbucks® recently reported that 60-65% of prior-year same-store sales recovered in the United States, while Target’s® online sales surged almost 150% due to COVID-19 crisis buying, with total company comparable sales up more than 7%.
Additionally, two of Collierville’s key retail partners and strong sales tax revenue contributors, Wal-Mart® and Kroger®, experienced solid COVID-19 period sales gains. Wal-Mart® has seen same-store sales up 10% in 2020, with Kroger® seeing a 30% sales surge in March.
Business Insider recently ran a piece about “Recession Proof Cities.” Their analysis fell into three categories: employment, housing, and social factors.
Since I’ve already discussed employment, let’s explore housing. Experts share that 30% to 40% of median household income should be allocated toward housing costs. In Collierville, our median household incomes are exactly 30% of our median home values. In another analysis, BI stated that there should be a 20% to 30% average home value to average net worth ratio. With average home values in Collierville at $375,346, and an average net worth of $1,767,000, that puts us right around 20%. Well done, folks!
In terms of social factors, BI explored topics such as the percentage of people who receive some form of government assistance. In Collierville, 4% of our citizens receive government support, versus a national number of 13%. What this tells me is that our community is generally economically healthy, and there is reason for optimism.
Collierville has weathered some extremely difficult circumstances in the past. We adapt, we innovate, we volunteer, and we come together. I remain optimistic about the path forward. The latest data is promising, the trends are encouraging, and I have already witnessed the exceptionalism of Collierville during these last several months. #Optimistic
John D. Duncan
Director of Economic Development
500 Poplar View Parkway
Collierville, TN 38017