Local Economy Remains Step Ahead Of State, Nation
Watching the Mercedes-Benz and Audi luxury vehicles roll off his lot in record numbers, Pat Lind’s concerns are hardly about the lingering effects of the national economic woes, but instead how he’s going to keep his inventory stocked.
“We never felt the brunt of the recession,” said Lind, the general manager at Carousel Motors in Iowa City. “There was a little bit of a lull in ’08, but we’ve been blessed in a lot of ways because of the strong local economy.”
Lind says business has never been better in the company’s four decades, including sales of big-ticket luxury vehicles. Carousel has recorded about 20 percent annual growth in recent years, adding a new line of Mercedes vehicles in 2010 and nearly doubling its new and used car selection. The challenge these days is ordering enough vehicles from manufactures to meet demand, Lind said.
“We are in a daily battle to earn more allocation to be able to sell more cars and deliver more cars,” he said.
Economic indicators — car sales included — continue to measure up favorably for Johnson County, which local experts agree remained largely insulated during the national recession and the nearly three years of recovery since.
Local unemployment numbers are at nearly half the U.S. rate and remain among the lowest in the nation. The housing market improved slightly in 2011, and the Iowa City area ranks among the nation’s best for property appreciation. Bankruptcies in the county are on the decline and well below the national average, and forecloses are less common here than elsewhere.
Lind isn’t the only local car dealer faring well, if the number of car titles issued is any indication. According to the Iowa Department of Transportation, 28,287 titles for new and used vehicles were issued in Johnson County in 2011, a 6.4 percent increase from the previous year. Statewide, there were 8.1 percent more new vehicle registrations in January compared with the same month last year, a sign that the economy is improving.
“We never seem to have the high highs that some of the markets had, but we didn’t seem to have the low lows,” Lind said of the Iowa City market. “... So when you have the combination of being in the right place — and Johnson County is a great place to do business — and representing the right brands of cars which are popular with the public right now, then you throw in the business environment with low interest rates and high resale values, quite honestly it’s a great time to be in the car business.”
The relative local economic health begins with jobs and the higher percentage of people working here than most every other city in the nation.
As of December 2011, the Iowa City metropolitan area’s unemployment rate was 4.3 percent, tying it for the seventh lowest rate nationally out of the 372 cities measured by the U.S. Bureau of Labor Statistics. Ames tied Iowa City for the lowest unemployment in Iowa, which on a whole had a 5.6 percent rate at the end of 2011. The current U.S. unemployment rate is 8.3 percent.
Brenda Dodge, operations director of Iowa City’s IowaWORKS Center, an employment services facility sponsored by Iowa Workforce Development, said the number of local job postings has been growing. Staffing agencies that hire temporary workers, particularly for manufacturing jobs, have been hiring more workers the past six months, Dodge said, indicating growth in the business sector.
There also are favorable signs in the housing market as local Realtors ramp up for spring, their busiest time of year. The Iowa City Area Association of Realtors reported 2,291 home sales in 2011 thanks to a strong December. That was up 1.1 percent from the 2,266 properties sold in 2010. This year also began well for Realtors, who sold 110 homes in January compared with 69 in 2010.
“Number one, the weather was good in the fourth quarter, and when the weather is good, people are out looking,” said broker Mark Kamps, president-elect of the Iowa City Area Association of Realtors. “And interest rates have been low. I think both of those things contributed in the fourth quarter.”
Johnson County residents also are avoiding foreclosure more than homeowners elsewhere. According to national real estate tracker CoreLogic, the foreclosure rate for the Iowa City area was 1.25 percent in November 2011, below Iowa’s rate of 2.16 percent and the U.S. rate of 3.46 percent.
It stands to reason that in areas with lower rates of unemployment and foreclosures, there will be fewer bankruptcy filings, said Robert Lawless, a professor of law at the University of Illinois who specializes in bankruptcy, consumer credit and business law.
“There’s no question that foreclosures are associated with increased bankruptcy filings,” Lawless said. “And to some extent, unemployment tracks that way, too.”
Bankruptcies in Iowa, and Johnson County specifically, have been consistently lower than elsewhere. In 2011, 7,861 people and businesses filed cases in Iowa’s two U.S. bankruptcy courts, with Johnson County accounting for 183. Bankruptcy rates have been on the decline the past two years after 270 Johnson County cases were filed in 2009.
The effects of the economic downturn, however, persist. The city of Iowa City issued just 80 building permits in 2011, which was about 60 fewer than average over the previous 10 years. The city issued permits for $19.8 million in single-family home construction projects in 2011, its lowest total in at least a decade.
For University of Iowa associate professor of economics John Solow, one of the more telling ways to measure an economy’s health is its per capita income, which divides a group’s earnings by its population. According to statistics compiled by the U.S. Bureau of Economic Analysis, Johnson County’s per capita income was $38,330 in 2009 — the most recent figures available — which was more than the $37,646 average for Iowa as a whole but less than the $39,635 national average.
Median household income peaked in Johnson County in 2008 at $54,871, before dipping to $48,955 in 2009. The pendulum swung upward again in 2010 to $51,014, more than the state level of $48,031 and national level of $50,046.
Although such statistics can serve as a good overall indicator, Solow warns that they don’t tell the whole story.
“The economy seems to have turned around and is slowly growing, but what’s true of the economy as a whole is not true about every individual or about every geographic area or every industry and sub-sector,” Solow said. “I’m sure there are plenty of people out there for whom, personally, things are still not good.”
Johnson County Social Services coordinator Lynette Jacoby said many families still are struggling as the wage gap widens. A 2010 community assessment conducted by the Johnson County United Way, for instance, found 30 percent of local families were living in poverty. Jacoby said the county’s poverty rate remains well above the statewide number — 17.5 percent in Johnson County compared with 12.5 percent for Iowa as a whole, according to 2010 U.S. Census numbers.
“I think there’s a big challenge for many to obtain a living wage and work their way out of poverty,” Jacoby said.