Welcome to the Future of Finance, all in a tidy little package:

Spatial Finance: Satellite imagery is being integrated into the process of assessing the high stakes of climate risk in the $3.8 billion municipal-bond market. Traditionally, finance is a columns and rows exercise. Climate change is not — it is much more powerful when visualized. Enter satellite imagery to monitor the effects of floods, wildfires, earthquakes and other natural disasters on local economies. Proponents saw it as a potential game changer such that data will be indispensable to understanding the effects of climate change. Taken together, researchers realized the data was relevant to credit quality, which was the genesis of what is now known as spatial finance. (Bloomberg – Feb. 6, 2020)

End of Satellite Scarcity in Sight: Industry projections indicate there may be as many as 57,000 satellites in low-earth orbit by the end of 2029, a number sufficient to support all manner of communications and surveillance — including the needs of spatial finance.

Coronavirus Having Real Impact on U.S. Finances: China’s COVID-19 coronavirus outbreak is expected to dampen U.S. economic growth in the first quarter, according to a survey of economists by The Wall Street Journal. The paper’s monthly survey of economists found 83 percent of its panel expected the coronavirus outbreak to have a small 0.5 percent impact. (WSJ – Feb. 12, 2020) A post-weekend estimate indicated a growing impact that could account for as much as 4.5 percent of the U.S. gross domestic product growth from January to March. Dun & Bradstreet estimates 51,000 suppliers in the affected region have taken a significant financial hit from the outbreak. (Reuters – Feb. 17, 2020)

Schooling the Golden State: California Construction Workers will support Proposition 13. With a $15 billion public school and university construction bond in the balance, Gov. Gavin Newsom reversed his appointment of union head Robbie Hunter from his Future of Work Commission. The two men differed on the construction workers’ role as independent contractors in the gig economy. As CalMatters reported, “Rivalries aside, the State Building and Construction Trades Council last week gave $250,000 to the campaign committee headed by Newsom to win approval of the bond. The committee has raised about $5.5 million so far. Construction workers will get lots of work if it passes.” (CalMatters – Feb. 02, 2020)

NYC’s $1.5 Billion Public Housing Privatization and Rehab: “The New York City Housing Authority has struck a deal to privatize 6,000 public housing units in Manhattan and Brooklyn under an arrangement that will fund $1.5 billion in repairs. In all, it puts the management of five complexes in private hands, including affordable-housing builders, and represents the largest infusion of private cash to the agency’s portfolio of 176,000 apartments, many of which need repair and revitalization. (Crain’s – Feb. 14, 2020)

Fifty-State Fiscal Forecast Trending Up: The Pew Charitable Trusts released its detailed “Fiscal 50: State Trends and Analysis” report last month with mostly positive news. On the upside:

  • “After years of slow progress, states have benefited from a more promising economic and fiscal environment. Pressure on state finances eased as the U.S. economic recovery became the longest on record and revenue upswings led many states to post budget surpluses;
  • “Tax collections in a record 45 states had surpassed their recession-era peaks, after adjusting for inflation;
  • “A decade after the Great Recession ended, the number of states in which tax collections had fully recovered jumped to 45—the highest yet—as most states closed out their 2019 budget year, after accounting for inflation;
  • “The U.S. employment rate for adults of prime working age rose in 2017 for a seventh consecutive year, though no state could boast that its core labor pool had clearly surpassed its pre-recession employment rate;
  • “States had more savings set aside at the end of fiscal 2018 to weather the next economic downturn than at any point since the 2007-09 recession; and,
  • “Nationwide, rainy day funds held a record amount of money, and at least 26 states’ savings exceeded pre-recession levels when measured as a share of operating costs.”

The Pew analysis cautions that it is not all smooth sailing though. On the downside:

  • “Not all states have fully recovered from the shocks of the Great Recession more than a decade ago;
  • “Even states that have overcome the effects of the recession may face financial and demographic pressures that could shape their budgets now and for years to come;
  • “A number of state governments face fiscal constraints today because of inherited shortfalls in funding for public employees’ pension and retiree health care benefits; recurring deficits between annual state revenue and expenses; and weak population growth, which can affect economic prospects and revenue collections; and,
  • “Among other challenges facing states are rising costs for Medicaid, a health care program that accounts for the largest share of total federal aid to states, and tax revenue volatility, which can confound policymakers’ efforts to balance budgets.”

Public Debt Since the Founding Fathers: On this President’s Day week, we’re reminded that George Washington hated public debt and that, proportionately, the young country had a lot of it. According to the new Washington biography, You Never Forget Your First, America had $40 million in red ink on the books domestically since the very beginning — plus another $25 million internationally, including $11 million to France, and that last sum made the first president feel particularly vulnerable, with the new country not yet having a navy and all.