Nowak Lab Newsletters
Linked below are Nowak Metro Finance Lab newsletters, shared biweekly by Bruce Katz.
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Abundance, the blockbuster book by Ezra Klein and Derek Thompson, two journalists we have long admired, has rightfully spent weeks on bestseller lists and has accordingly dictated months of policy discourse.
The book delivers on many levels and deserves the accolades it has received. The central thesis of the book — that it is time for the nation to build again and embrace abundance over scarcity — is timely and compelling. It has the potential not only to galvanize positive change across multiple areas of domestic life but also to alter our politics by showing that modern societies can function and provide affordable goods and services for broad segments of our population.
As with every great industrial leap, the race among states to lead the AI revolution is reaching a fever pitch. We are living through a transformation that could shape the 21st century even more profoundly than railroads and steel defined the late 19th century, or the personal computer and the internet transformed the close of the 20th. We are now entering the steep part of the hockey stick curve for AI innovation—when breakthroughs move from research labs and pilot projects into the physical world, driving exponential changes in how we produce energy, manufacture goods, move people and freight, and secure national defense. In this age of “future shock” innovation, progress is inseparable from energy and infrastructure—and infrastructure, in turn, is inseparable from political will. The states that will win are those able to cut through permitting bottlenecks, align policy with industry needs, and move capital to the ground quickly. Speed, strategy, and scale—mirroring the first movers in tech’s Magnificent Seven—will decide who builds the competitive platforms that fuel generations of growth.
The housing market in the United States has reached a crisis point. Americans, rural, suburban and urban alike, are facing the most extreme housing pressures seen in generations, precipitated by the failure of housing supply to keep pace with housing demand.
Cities, counties and states across the country have become the front lines of the effort to address the current housing crisis. Many communities, not surprisingly, focus on the “what” – reforms and investments to boost the production, acquisition and preservation of affordable housing. Few communities, by contrast, focus on the “how” – new institutions and mechanisms that enable the hard work to get done.
Periods of market and technological upheaval tend to catalyze financial innovation. Given the confluence of geopolitical tensions, the acceleration of next generation technologies, the implications of AI and reshoring for energy demand, the severe imbalances in the housing sector, and, most recently, the radical scaling back of federal government programs and policies heretofore seen as sacred and invincible, an era of financial experimentation should now be upon us.
The result of this tumult is that cities and states are starting to work harder for themselves. We are particularly impressed and intrigued by an effort underway in Ohio. There, a group of leaders and investors has created and capitalized The O.H.I.O. Fund, focused on Ohio’s High-Growth Investment Opportunities.
There’s been much talk of federal spending this year. Two of us have written on the flow of federal resources, and how locals prepare for major shifts. As we have noted, a critical part of federal funding flows through public procurement, in addition to federal entitlements and programs.
Frankly, procurement writ large forms a substantial part of the economy, touching every geography via federal, state, and local purchasing, in addition to procurement by corporations and nonprofit institutions. While it is difficult to say with certainty how spending patterns will shift in public procurement, the magnitude will continue to be immense and unmatched.
Early last month, the Vatican named Pope Leo XIV to lead the Catholic faithful. The elevation of Cardinal Robert Francis Prevost was a surprise pick. Chicago-born, Prevost had spent most of his career as a missionary in Peru and became a cardinal only in 2023.
But the selection of Pope Leo was foreseen by three scholars from Bocconi University in Milan, Italy.
These scholars—Giuseppe Soda, Alessandro Iorio, and Leonardo Rizzo—applied social network analysis methods to one of the most closed institutions in the world: the College of Cardinals.
The Infrastructure Investment and Jobs Act (IIJA), Inflation Reduction Act (IRA), and CHIPS and Science Act catalyzed an unprecedented wave of public capital, which would spur private investments to upgrade America’s infrastructure, promote clean energy, and drive reindustrialization. The surge in funding flowed through a complex and expansive mix of grants, low-cost loans, procurement, and tax incentives – creating a labyrinth of programs that strained the capacity of local, county and state governments, many of whom were already stretching their fiscal and administrative capacities in the wake of the pandemic.
Since the launch of the Department of Government Efficiency, I’ve been meaning to write a piece about, well, “government efficiency.”
For those people who have had the privilege to work in the public sector, we know the breadth and depth of the challenges that our country faces and the commitment to service that enables public servants in our communities to be rightfully called “essential workers.”
Earlier this year, Houston Mayor John Whitmire released the City of Housing Efficiency Study: A Path to Restoring Trust in Houston’s Government. The report can be found at COH-Efficiency-Study-Final-Report.pdf and it is worth a close read.
Michael Saadine and I recently attended a remarkable retreat on Fogo Island, off the coast of Newfoundland. The retreat, hosted by Shorefast and the Canadian Urban Institute, focused on ways to bridge the gap between global capital and local economies — moving money into “place”. Participants included community practitioners as well as representatives from financial institutions and capital providers.
In his January 1959 State of the Union, in the waning years of his presidency, President Dwight Eisenhower called for a Commission on National Goals. In a speech dominated by Cold War concerns and gargantuan military spending, Eisenhower took the privilege of the presidency to “express something that is very much on my mind.”
Local and state actors have been taking stock of what the current moment in Washington means, assessing regional exposure to the effects of federal agency restructuring, spending cuts, workforce reductions and radical shifts in trade, immigration, health and science policies. For the most part, a broad array of federal grantees, borrowers and recipients are responding to the immediate impacts. Yet the interconnectedness of city and metropolitan regional economies — and the public, private and civic institutions that drive them — means that there will be longstanding, reverberating effects, with multiple, domino-like second and third order effects.
Amidst the daily noise and chaos, the US has begun a grand experiment, the radical defederalization of roles and responsibilities in the nation. We have seen versions of this movie before of course, particularly during the 1980s when the Reagan Presidency drove state innovations around health care and welfare reform. But this 21st century version of defederalization is happening at an unprecedented speed and scale, with much less ideological consistency and coherence and no coordination — NONE — between layers of governments.
The country is in a moment where the distribution of responsibilities and resources between local communities and the federal government is shifting. The last four years have been defined by large federal investments, while the current moment can best be defined as rapid retrenchment, with budget cuts being discussed at an unprecedented scale.
The National Housing Crisis Task Force released the first tranche of tools in its State and Local Housing Action Plan for communities. The introduction to the State and Local Housing Action Plan summarizes all of the expected tools we plan to release in the coming months.
The past 5 weeks have been painful to observe and experience. The Trump Administration has, in rapid fire fashion, moved to pause and condition federal funding, reduce the federal workforce, impose tariffs on trading partners and defy judicial orders. On Tuesday, the House passed a budget resolution that would continue tax policies enacted in 2017 (at a cost of roughly $4 trillion over the next 10 years) while reducing federal spending by $2 trillion over the next decade, with Medicaid and Supplemental Nutrition Assistance Program (SNAP) being the primary targets.
The U.S. housing system, long supported by consistent federal policies, faces unprecedented uncertainty due to recent government shifts. While programs like the Low-Income Housing Tax Credit and Housing Choice Vouchers have historically underpinned affordable housing, new administrative actions threaten to disrupt this stability.
In light of recent federal disruptions, cities and metropolitan areas must unite and take charge to protect their economies and residents. Local leaders need to organize quickly, collaborate across sectors, and adapt to the challenges ahead. This new localism requires agility and coordination to defend against federal changes, leverage opportunities, and ensure long-term prosperity. The time to act is now.
Housing has dominated state and local headlines, the federal campaign trail, and even this newsletter of late. But you wouldn’t know it if you were moving within private capital circles. Rather, the talk of the town in the public markets, amongst lenders, and at private equity conferences is data centers: housing for chips.
Opportunity Zones (OZs) have emerged as a significant tool in driving investment into underdeveloped areas, offering a compelling case for their continuation and expansion. Since their inception in 2017, OZs have attracted nearly $100 billion in private capital, according to the Economic Innovation Group (EIG).
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