Nowak Lab Newsletters
Linked below are Nowak Metro Finance Lab newsletters, shared biweekly by Bruce Katz.
Sign up to receive updates
“Fasten your seatbelts, it’s going to be a bumpy night.” So famously said Bette Davis’ character in the classic 1950 movie All About Eve. Replace “night” with “four years” and we just begin to have a sense of what Tuesday’s election means for the world and our nation.
Treating the housing crisis like a crisis means the federal government must fundamentally restructure the way it is organized, substantially boost the production and preservation of housing, and take bold action to provide a housing safety net. Taken together, the Task Force’s recommended actions will reduce regulatory barriers and provide sufficient support and incentives to produce more than 750,000 new housing units per year, protect and preserve our existing housing stock, and create the institutions necessary to fundamentally transform the housing sector for the twenty-first century.
As we’ve written before, the U.S. is in the midst of a monumental effort to revive its industrial economy. This transition is resulting in new opportunities and a new industrial geography that is shifting power away from long-dominant “superstar cities” towards cities and metros with a propensity for industrial production. This New Economic Order is being shaped by the need to remilitarize, reshore, and decarbonize the economy, leading to a surge in domestic production across the country.
This month, the US Department of Defense (“DOD”) released two signature documents that remind us of the outsized effect that defense industrial spending has on state and metro economies and the extent to which the defense industrial base is dependent upon smart state and local action.
As housing takes its place as one of the leading national and local issues, topics that we have previously written about like federal government leadership, reducing barriers, mobilizing capital, and industrial policy innovation have rightfully taken center stage. In addition to these key themes, we must not lose sight of the occupants of housing — homeowners and tenants — especially the most vulnerable among them. In our final preview of the National Housing Crisis Task Force’s upcoming national policy agenda, we want to focus on the theme of providing a housing safety net.
After years of neglect and omission, housing has suddenly become the policy challenge du jour. The recent Vice-Presidential debate featured a spirited back and forth between Governor Tim Walz and Senator J.D. Vance over causes of and solutions to the housing crisis.
This attention and the outsized supply challenges facing the nation naturally raise structural questions of organization and delivery. Which entities – private, public or nonprofit — actually produce housing? What constraints do they currently face, around capital, workers, materials, technologies and supply chains? What innovation is occurring in the sector and by whom? How does the building of homes and multifamily apartments comport with other critical challenges like climate change and the propensity of new manufacturing facilities to locate at the periphery of metropolitan areas, creating a spatial disconnect between home and work?
The 2020s will be remembered as the era when artificial intelligence sparked not only an economic transformation, but a new industrial revolution. As Goldman Sachs put it last year, AI has shifted from an “excitement” phase to a “deployment” reality, permeating critical sectors of the economy including defense, health care and energy with rapid speed.
Two weeks ago, we wrote about how the federal government can take steps to treat the housing crisis like the crisis it is. We know the government has the capability to lead in a crisis, as evidenced by recent responses to COVID-19 and the climate crisis. We proposed that the first key step for the government to take is to lead and focus the nation, appointing empowered White House leadership to begin taking organizational, administrative, and legislative action.
Housing market conditions in the U.S. are undeniably in their worst state in years. Housing is any given American’s largest recurring expense and is linked to health, climate, jobs, and productivity. Home price to income ratios have reached record highs, more and more renters are cost-burdened or severely cost-burdened, homelessness is at unacceptable levels, and we have a massive shortage of homes.
For 25 years, the rebound of central business districts has been a driving force in the rebirth of U.S. cities. That positive dynamic is now threatened as the rise of hybrid and remote work drives detrimental, domino-like effects on commercial real estate, small businesses, transit ridership, and municipal tax generation. In certain sectors, working from home, either part time or full time, has become a structural feature of the post-pandemic economy, not a cyclical aberration. The harsh reality is that there will be no bounce back to the pre-COVID era. As a result, cities need to move fast to diversify their downtowns economically, amplify their downtown culturally, and remake their downtowns physically.
Earlier this week, the Nowak Metro Finance Lab at Drexel University and Accelerator for America launched the National Housing Crisis Task Force.
The Task Force, months in the making, held its first meeting in New York City, focusing intensely on the breadth and depth of the housing crisis and the urgent need for all layers of government and the private and civic sectors to rise to the occasion and fully treat the housing crisis like the crisis it is.
By all accounts, the U.S. economy is undergoing an industrial transformation of monumental proportions. This transformation is gradually shaping a new industrial geography in the country – across and within metropolitan areas and broader regions — which could have profound implications for sub-national growth and development for decades to come.
An era of federal activism raises the potential to use public procurement to grow small businesses and create wealth. To fully capitalize on this potential, we need innovative tools and techniques that turn procurement from an administrative process into an inclusive growth catalyst.
At the Nowak Lab we have developed a Procurement Playbook to seize the moment. These Playbooks size the procurement economy, identify challenges, and offer actionable small business strategies for governments and the broader ecosystem of business chambers, financial institutions, and entrepreneurial support organizations.
It’s no secret that the country is in the throes of a housing crisis. However, in the desperation to fix it, factions have gotten borderline religious about single, silver-bullet solutions. In reality, the housing crisis is more systemic and complex than ever before. Thus, moving forward will require a myriad of innovative, scalable solutions, elements of which are already being tried and tested at the state and local levels.
It has been ten years since we released The Rise of Innovation Districts and boldly declared that the spatial geography of innovation was shifting in the world towards innovation districts. Our observation was that monoculture science and research parks were no longer aligned with the nature of modern innovation. Rather, innovation districts, which concentrate in small (mostly urban) geographies a broad mix of academic institutions, corporations, researchers, startups, skills providers, and entrepreneurial support entities, were better suited to advance creativity and collaboration by leveraging physical proximity, accessibility, walkability and density.
About a year and a half ago, I had the privilege of visiting Bilbao at the invitation of Bilbao Metropoli 30. Famed for the Frank Gehry designed Guggenheim Museum, Bilbao has been a global inspiration for the regeneration of former industrial cities.
Bilbao is the capital of Biscay, one of the three Historical Territories of the Basque Country. It is located in the Atlantic Arc of Europe, a confluence of two continents and an axis of the Mediterranean Sea and the Atlantic Ocean.
The energy transition impacts every aspect of the modern economy, driving transformative changes in the nature and location of economic activities. With recent legislation such as the Infrastructure Investment and Jobs Act, Inflation Reduction Act (“IRA”), and CHIPS and Science Act, the U.S. government is investing at record levels to expedite the transition to a low-carbon economy. Taken together, these historic federal actions are allocating hundreds of billions of dollars over the next five to ten years, driving an economic restructuring of monumental proportions.
Where you live is of supreme importance in America. Your address is a factor in what schools your children can attend, the jobs within reach, the value of your home or the price of your rent, the quality of your air, and much more. Your neighborhood is also your social network, your community, and often, part of your identity. Yet not all neighborhoods are equal: some have better or worse schools, higher quality or subpar housing, more or less access to transportation and jobs, and other forms of inequality. These neighborhood divisions are often the result of segregation by race and class, influenced by governmental policies like redlining, mortgage discrimination, and urban renewal.
A consistent focus of this newsletter has been the pandemic and other disruptive forces that have followed in its wake that have the potential to reshuffle the order of successful cities. As I’ve written before: “For cities that are organized, deliberate and purposeful, there is the tantalizing prospect of using this period to leapfrog, diversifying and greening their economies to become more economically resilient, socially inclusive and environmentally sustainable.”
As the United States faces escalating tensions across the globe, the modernization and transformation of our military has become an urgent concern. In response, the Department of Defense’s budget has increased significantly in recent years. In FY 2023, Department of Defense Appropriations totaled $797 billion, marking a nearly 10 percent increase over the previous fiscal year. These appropriations are critical for the United States and our allies to advance critical security objectives; they also have a sizable impact on communities across the nation, given how spending on personnel and contracts is recycled in metropolitan economies. This phenomenon, which we term the Defense Dividend, presents a unique opportunity for local and state leaders to use federal spending to drive economic growth, foster high-quality employment, and accelerate innovation.
Note: A version of this newsletter was initially published by Governing Magazine on March 5, 2024
It is a rare occurrence when I bookmark a government white paper as a must read. Such reports tend to be dry, jargon-rich, bureaucracy-deadening affairs, more likely to induce a state of somnolence than impart knowledge or catalyze action.
The National Defense Industrial Strategy is an exception.
Note: This newsletter was initially published by Governing Magazine on February 21, 2024
As we start 2024, it won’t come as a surprise that most of the traditional metrics underpinning housing affordability are moving in the wrong direction. Despite improvements in long-term interest rates and a slowdown in multifamily rent growth, rental affordability reached an all-time low in 2022. Based on the U.S. Census, an estimated 22.4 million renters now spend over 30 percent of their income on rent.
Over the past several years, the Aspen Institute Latinos and Society Program and the Nowak Metro Finance Lab at Drexel University have dedicated countless hours to one central goal: using the expanding Procurement Economy to grow small local businesses, particularly those owned by socially and economically disadvantaged individuals.
Our collaborative effort has been driven by the substantial increase in federal spending, spurred by the successive enactment of the $1.9 trillion American Rescue Plan Act, the $1.2 trillion Infrastructure Investment and Jobs Act, the $280 billion CHIPS and Science Act, the $411 billion Inflation Reduction Act and the $800+ billion (and rising) annual Department of Defense appropriations.
One of the lasting images of the pandemic period is of ships carrying goods from Asia stuck off the coast of California. The images prompted a burst of heroic federal action and the term “supply chains” became embedded in the public consciousness.
As with many things in the US, the pandemic images have receded into memory. But supply chain issues and the inefficiencies of our logistics sector persist, complicated by a surge in work-from-home and shop-from-home behavior as well as the reshoring of production driven by national security concerns and climate imperatives. And now, on top of these seismic shifts, we are encountering a rising conflict in the Red Sea and drought challenges facing the Panama Canal.
Supply chains matter and we ignore them at our peril.
Fueled by macro dynamics and unprecedented federal investments, the reshoring of advanced manufacturing is happening at a pace and scale that would have been inconceivable even three years ago. As a result, in many respects the hierarchy of American metros is being reset. If the decade between the Great Recession and the pandemic seemed to be all about “superstar” tech cities, many of the winners in the remote-work era are going to be places that make tangible things.
Since we launched the Innovative Finance Playbook in November 2022, Catalyze and the Nowak Metro Finance Lab have been assessing Revenue Based Financing, or RBF, as a tool to help address the capital gaps and deficiencies laid bare by the COVID pandemic; namely, the 83% of entrepreneurs who do not access traditional bank debt and venture capital. We recently released a report sharing our findings entitled “The State of Revenue Based Financing and CDFIs.”
The pandemic and post-pandemic period have been defined in many respects by capital. Beginning with the CARES Act and continuing with the American Rescue Plan Act, the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act, this capital period has seen the federal government dedicate trillions of public resources for a broad set of activities, initially related to rescue and recovery (a focus on preserving existing businesses and communities) in 2020-2021 and then economic transformation (an industrial/energy transition of monumental proportions) in 2021-2023.
2023 Newsletters
2022 Newsletters
2021 Newsletters
2020 Newsletters
2019 Newsletters
2018 Newsletters
Read previous newsletters from The New Localism