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BBA Economic Digest: Creating Opportunities

Creating Opportunities

On Aug. 5, 1864, a union fleet commanded by Rear Admiral David Farragut entered heavily mined Mobile Bay in Alabama. When one of his ships struck a mine and sank, Farragut could see his other ships pulling back. Lashed to the rigging of his flagship, USS Hartford, Farragut called out, "What's the trouble?" "Torpedoes", was the shouted reply. (Naval mines during the Civil War were called "torpedoes.") "Damn the torpedoes," Farragut yelled. "Four bells, Captain Drayton, go ahead. Jouett, full speed." Farragut's eventually fleet triumphed over the defending confederate forces in the Battle of Mobile Bay. So what can we learn from this? The truth is we rarely have all the data we need to make any decision bulletproof. Uncertainty, which paralyzes some, can create opportunities for those willing to take risks to gain a competitive advantage. When I suggested to an economic developer about creating an emergency loan fund in his community, his response was, "Well, aren't there risks involved?" Yes, but doing nothing while a significant part of your small business community melts away is not a good option. No doubt, you'll have your naysayers who'll say it can't be done, shouldn't be tried, or "we've never done that before." Or shouldn't we wait until we have all the facts?

Before going all in, like Farragut did, consider these questions:

  • Will you and your team be proud of what you've accomplished?

  • Does your decision reflect your core values?

  • Have you accepted the consequences of failure?

  • Is your competition being hampered by the same lack of data?

A Time for Survival

For many small businesses, this has been a time of desperation in which survival is the goal.

National Bureau of Economic Research found that a record wave of closures has disproportionately hit black-owned businesses, which often have less financial resources. A survey of 500 minority small-business owners by the Global Strategy Group found that just 12 percent of PPP loan applicants received the full assistance they requested after the government began administering a second round of funding. Two-thirds of black and Latino businesses didn't receive any of it, the survey found. A separate survey by the National Federation of Independent Business found that 61 percent of small businesses overall received PPP funding. So far this month, there has been an uptick in searches related to black-owned businesses. Google searches for "How to find black owned businesses in your area" saw a 300 percent spike from June 1 to June 2 in the U.S., while searches for "Black owned restaurants near me" tripled.

Many economic development organizations have stepped up by creating locally-managed emergency loan/grant funds. Recognizing the need, Denton County, Texas, has set aside $20 million for a second round of funding for local small businesses later this month after initially earmarking $3 million for that purpose.

I've said it before, but it is worth repeating -- EDOs will be remembered for what they did and did not do during this time of economic crisis and social unrest.

Nobody cares about your words. It's your deeds that matter.

An Indoor Solution for Food

Vertical farming sounds a little strange, but this emerging industry may be one that some economic developers will want to take a hard look at. These eco-friendly indoor farms are becoming more popular as urban populations grow and available farmland decreases.

Steve Fulop, the mayor of Jersey City, N.J., recently announced that his city is moving forward with a municipality-run vertical farming program. The trailblazing initiative will be in conjunction with AeroFarms, which opened what was the largest indoor farm in the world in 2016 inside a converted steel mill in Newark. Kimbal Musk, the younger brother of Elon Musk, said Square Roots, a company he founded in Brooklyn in 2016l plans to open a "Super Farm" — with 25 climate-controlled shipping containers, cold storage, biosecurity infrastructure and everything else needed to run a vertical farm at scale — in less than three months. Since its inception, Square Roots has grown more than 120 varieties of crops, including greens, vegetables and strawberries. Some of the key players in vertical farming include AeroFarms, Gotham Greens, Plenty (Bright Farms), Lufa Farms, Green Sense Farms, Garden Fresh Farms, Mirai, Sky Vegetables, TruLeaf, Urban Crops, Sky Greens, GreenLand, Scatil, Metropolis Farms, Plantagon, and Spread. The hope is that cities will eventually be able to grow all the food needed from indoor farms located within city limits. "If an outdoor farm fails, the farmer has to wait until next year to start again, he said. "Indoor farms fail too, but the indoor farmer can start again within weeks," said Dickson Despommier, a professor of public and environmental health at Columbia University.

A Stark Gap

From birth to death, most black Americans have less wealth, which is perversely costing them more. Black families with a new baby have a median household income of $36,300, according to the Center on Poverty & Social Policy. For white families, it was more than twice as much: $80,000. For black students, their completion rate through June 2017 starting at a four-year institution was 38.9 percent. For whites, it was 64.8 percent — even though both groups graduate from high school at roughly the same rate. For many black students, a college education is no path to financial security. They tend to borrow significantly more than their white peers, and they’re more likely to default on their loans. Twenty-one percent of black graduates with bachelor’s degrees default. That’s more than five times the rate of their white peers (4 percent).

The black/white wage gap was significantly wider today than 20 years ago, according to research from the Economic Policy Institute. Even among those who attain advanced degrees, blacks were paid 82.4 cents for every dollar earned by their white peers. Hispanics do better, at 90.1 cents on the dollar.

The gap between black home ownership and white home ownership is the largest it has been in a half-century. In 2018, about 72 percent of white households owned homes, compared with nearly 41.7 percent of blacks, according to the Urban Institute.

The Horse is Out of the Barn

Telehealth use has skyrocketed during the coronavirus outbreak—and the trend is probably here to stay. I used it for the first time last week and was generally pleased with the results.

A pandemic of this scope naturally strains hospital capacity, and people with chronic conditions such as heart problems and diabetes likely don't want to go into a hospital setting where they put themselves at risk.

That's where telemedicine, virtual doctor visits, and other digital health technologies play a critical role. But despite the opportunity, challenges remain. Rural communities, which already have a shortage of hospitals, will need broadband infrastructure to support virtual visits with doctors.

“Forty-five percent of our visits are telehealth visits. The horse is out of the barn. Everybody has to do it. That has changed dramatically. There is no going back.” – Dr. Steven Corwin, CEO, NewYork-Presbyterian, told Fortune. “Telemedicine is enabling people to bring that health care much closer to them.” -- Dr. Vivian Lee, author of The Long Fix

The doctor whom I had a late night online video conference call with looked like he was home. After I described my symptoms, he became somewhat alarmed and urged me to immediately go to an emergency as he thought I might have a blood clot in my leg. Thankfully, ultrasound revealed no clot but a cyst, a far less serious diagnosis.

Signs of Life

As states gradually reopen, the U.S. economy is showing signs of life after one of the most significant downturns in history. Just how long the path to economic recovery might be is the biggest question on everyone's mind.

Federal Reserve leaders predict the U.S. unemployment will fall to 9.3 percent by the end of this year and 6.5 percent by the end of 2021, signaling confidence the economy will begin to recover in coming months from the stunning recession caused by the coronavirus outbreak. Signs of economic recovery include:

  • Multiple states have allowed restaurants to resume indoor dining. Still, restaurant bookings are now at 80 percent below their levels from last year.

  • Hotels have begun welcoming more guests as their occupancy rates near 40 percent, according to data from global hospitality research company STR.

  • Air travel passenger numbers are have fallen more than 80 percent when compared to last year, but there are still slight increases in May and June.

  • Mortgage applications are up nearly 20 percent when compared to last year, according to data from the Mortgage Bankers Association

But, but, but, as of Saturday morning, at least 13 states were showing an upward trend in average daily cases -- an increase of at least 10 percent -- over the previous seven days, according to an analysis of Johns Hopkins University data.

What We're Reading and Watching

Carolina Chocolate Drops: Snowden's Jig (Above)

The Landmark Book That Brought the Stories of Black Vietnam Veterans Out of the Darkness The Ringer

6 Comfort Foods Born of Historic Times of Discomfort Atlas Obscura

Take the Confederate Names Off Our Army Bases by David Petraeus

The Atlantic

Inside a Black Family's Cross-Country RV Trip Essence

Who Discovered the First Vaccine? Wired

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