The most recent edition of LMI Economic Conditions, published in February 2019, suggests that economic conditions in LMI communities may be stabilizing. Overall perceptions of economic conditions surged to just below neutral (no change in conditions). Statistics revealed a tight labor market, and survey responses showed continued improvement in job availability for LMI workers. But structural issues remain.
For example, low labor-force participation and inflation in goods making up large shares of LMI expenditure baskets, such as rent and health care, seem to be outpacing wage growth. Further, more than 60 percent of contacts reported that the demand for the services they provide was increasing, although some temporary factors may have been at play. According to contacts, the stock of affordable housing remained inadequate, especially for special populations.
One survey respondent said “We are seeing more low-income families doubling up in housing due to the lack of housing, especially safe, affordable housing.” In the survey, 38.2 percent of respondents said affordable housing had become less available.
Access to credit for LMI households appeared to be limited by poor credit histories and rising interest rates.
Indexes show positive trends emerging
The LMI Economic Conditions Index is approaching neutral (100) for the first time since the survey began in 2009, suggesting that the LMI community may be stabilizing after a decade of sluggishness. The index jumped from 73.2 in July 2018 to 93.1 in January 2019.The LMI Job Availability index advanced to its highest level since the survey started in 2009. It rose from 130.8 to 135.7 in the January survey.
However, concerns raised for services, labor force
The demand for services like food assistance, shelter and indigent health care is expected to increase for the LMI population. A higher demand for services is associated with poorer financial conditions. The index for expectations fell sharply to 47.2 from 56.9.The labor force participation rate was 44 percent for those in LMI households, down from 44.6 percent in December 2017. The rate was much lower than the non-LMI District rate of 64.7 percent.
About the LMI Survey: Historical perspective
The LMI survey was initiated in the first quarter of 2009 and is distributed every January and July to organizations that provide services directly to LMI individuals and communities and directly engage the LMI population on a regular basis. Underlying the survey scheme is a supposition that those interacting directly with LMI individuals and communities are best positioned to relay the economic realities facing LMI populations and to raise critical and emerging issues.
The survey asks a series of questions on the demand for services, job availability, access to credit and the availability of affordable housing. Each question asks if conditions have improved, worsened, or are unchanged. Survey respondents also are asked to provide their overall assessment of economic conditions in LMI communities. The responses are used to construct indexes that track economic conditions in LMI communities over time. Survey respondents also are asked to provide comments, which offer perspective for the quantitative indexes calculated from survey responses.
The LMI Economic Conditions report, which debuted in 2015, was in part a consolidation of two previously existing publications: the LMI Survey report and the Tenth District LMI Labor Force report. The impetus for the change was a desire to provide information on economic conditions in LMI communities in a more useful, concise and complete publication. It was conceptualized as a one-stop shop for economic information relevant to LMI communities. The LMI Survey remains the primary source for data and information on economic conditions in LMI communities.
Kelly D. Edmiston is a senior economist at the Kansas City Fed. Read his work in Community Research.