Slow Jobs Recovery in Major US Metros Drags on Long-Term Tax Growth

Job losses may affect the long-term tax revenue growth prospects and squeeze budgets, although most municipalities have headroom to manage budget gaps at current rating levels. However, the risk of a return to economic contraction consistent with Fitch’s coronavirus downside scenario could compound revenue declines and pressure local governments’ financial resilience. Lagging employment growth or fresh declines could challenge the ability of cities and municipalities to manage through the crisis.

The New York and Las Vegas metro areas saw significant peak-to-trough jobs declines of 20.3% and 23.7% and recoveries of 37% and 48%, respectively, resulting in the largest difference between major metros jobs levels in February compared with August. The other major metros with the largest jobs gaps, meaning less than 90% of February levels, are Rochester, NY; New Orleans; San Francisco; Boston; Detroit; Cleveland; Los Angeles; and Raleigh, NC. Read more via FitchRatings