As a result of COVID-19, we are living in “the deepest dive on record for the global economy for over 100 years”according to Kenneth S. Rogoff, a Harvard economist and co-author of a history of financial crises. While the seriousness of this is certain, experts debate how long this downturn will last and how much damage it will cause.
Local governments will need to make tough decisions to weather the storm. Resident surveys can make these decisions easier by shedding insight into the local economy.
The surveys that many local governments sponsor, called “community surveys,” typically include questions asked of a representative sample of residents about the quality of community life, service delivery, public trust and resident engagement.
Community survey data can be a powerful tool to inform local economic decisions. Here’s why:
Community Survey Data Can Help Predict Possible Future Economic Outcomes
Our research shows that community survey results tie closely with economic data from other sources, such as the Dow Jones Industrial Average (DIJA). This close relationship between resident opinion and an objective measure of the economic environment bolsters the validity of survey results. This means that community survey data can be a powerful tool in predicting possible future economic outcomes.
National Research Center, Inc. (NRC) has published a study showing a strong relationship between the optimism respondents had about their family’s economic future and the unemployment rate in the country during the Great Recession. Our survey results about personal economic optimism came from a non-random selection of a large number of jurisdictions whose residents completed surveys about their life and their community. When the unemployment rate decreased, optimism about the future improved and vice versa, suggesting that the survey, in fact, measured residents’ accurate view of their real economic potential.
To test the linkage again, we completed an analysis of averaged annual ratings on the same question correlated with the year-end closing value of the Dow Jones Industrial Average (DJIA). The survey question reads as follows (taken from The National Citizen Survey, now called The National Community Survey):
“What impact, if any, do you think the economy will have on your family income in the next 6 months? Do you think the impact will be: very positive, somewhat positive, neutral, somewhat negative, or very negative?”
We correlated the average percent of respondents who said very or somewhat positive each year from 2001 to 2016. There were 489,058 respondents with no fewer than 20,000 in any given year taken from the surveys conducted by National Research Center, Inc. (NRC) in hundreds of jurisdictions across the United States. (Again, the jurisdictions self-selected by choosing to hire NRC, so they are not intended to represent a random sample of places or people.)
Nevertheless, as in the previous study linking this same survey question with the U.S. unemployment rate, our current study showed a strong positive relationship (r=.74) between optimism and the DJIA.
Understand the Fuller Picture of Your Local Economic Situation
Using more than one type of data can help you understand your situation more fully, so you can make more informed decisions.
For example,when it comes to trash collection we might know that trash pickup occurs one time a week. But we might also know that residents rate the quality of trash pickup low in a community survey. Both types of data are useful and can paint a better picture of the overall trash collection system in a town.
Similarly, with economic data, the Dow Jones Industrial Average (DJIA) is one type of economic data that can paint a national picture of the economic situation. Whereas, your community survey data captures a more localized picture that gives you insights into resident sentiment. Both types of data, especially when considered together, are valuable when making decisions about local programs, policies, supports, and communications.
This is an updated blog originally posted on May 23, 2017.
National Research Center, Inc. (NRC) is a leading full-service survey research and evaluation firm focusing on the information requirements of the public sector, including local governments, health care providers, foundations and non-profit organizations. Visit our home on the Web at www.n-r-c.com. Check out our media page for more news, tips and human-interest stories from NRC.