Celebrating the Impact of Place-Based Investing with EDA and Brookings Metro (EDA) The EDA is paving the way among federal agencies for place-based investing through initiatives like the Build Back Better Regional Challenge (BBBRC), the Recompete Pilot Program, and the Regional Technology and Innovation Hubs (Tech Hubs) Program. These competitions not only empower communities to build their own visions of economic growth and reinvigoration; they also level the playing field through two-phased application structures that allow regions with fewer assets or less experience with interorganizational collaboration the ability to refine these visions. The article features a video from Assistant Secretary Alejandra Castillo discussing place-based economic development at Brookings Metro.

Analysis Showing Historically Strong Business Investments (U.S. Department of Treasury) The U.S. Department of the Treasury’s Office Economic Policy released an analysis that shows American businesses are doing well not simply because their earnings are high, but because they are investing those earnings productively. American business investment is outperforming expectations in the post-pandemic expansion; businesses have invested $430 billion more since 2019 than if investment had followed historical patterns. Factory building (construction for manufacturing) has contributed almost one third of business investment growth since the pandemic. Overall, the outlook for future business investment growth is encouraging: firms are observing persistently high returns to their capital, and founders are starting new businesses at historic rates.

State Alignment with Economic Development Districts (EDDs)

CREC Policy Academy Report (SEDE) The EDA awarded funds to CREC to study and improve alignment between state economic development agencies and local partners, especially EDDs. One major technical assistance element of the EDA project was a Policy Academy which established a nine-month cohort learning process with participants from Colorado, Idaho, Kansas, Louisiana, Michigan, and Wisconsin. Participants embarked on a process to better align strategies and actions between state leaders, EDDs, and other state and local stakeholders. This report highlights team activities, lessons learned, and offers final thoughts on the Academy process. A short blog summarizing the Academy is also available here.

Statewide Planning Grant Database (SEDE) The EDA’s award to CREC to explore state-EDD alignment included a review of the Statewide Planning Grant (SPG) Program. As part of the project, CREC created a database containing detailed information on EDA Statewide Planning Grant (SPG) projects, partners, and priorities. Using findings from surveys and interviews, this database helps states and Economic Development Districts (EDDs) understand SPG projects, learn more about state-EDD alignment, and offers ideas on how to administer future grants. Click here to view the database and other resources related to the SPGs.

Statewide Planning Grant Practices and Metrics Report (SEDE) CREC’s SPG project CREC included surveys and interviews with all 59 grant recipients. The interviews offered insights into the collaboration efforts nationwide and uncovered a set of effective grant management practices, such as creativity, alignment with partners and EDDs, and successful administrative management of the funds. Common metrics for assessing the success of the states in their activities were also discovered. This report details the practices, roadblocks, and metrics of the SPG Program to share new insights into SPG activities and provide a foundation for guidelines for future projects and state-EDD collaboration.

Webinars

Recording: Update on the NSF Regional Innovation Engines (SEDE) NSF hosted a webinar on June 7 to present the NSF Regional Innovation Engines initiative. The NSF Engines program will provide up to $160 million to each Regional Engine for up to 10 years to support the development of diverse regional coalitions to engage in use-inspired research and development, translation of innovation to society, and workforce development — with the goal of growing and sustaining regional innovation ecosystems throughout the U.S. The recording is available here.

*Economy 💰*

U.S. Job Gains Surge Past Expectations, Wage Growth Quickens (Reuters) The U.S. economy created far more jobs than expected in May and annual wage growth reaccelerated, underscoring the resilience of the labor market and reducing the likelihood the Federal Reserve will be able to start rate cuts in September. The Labor Department’s closely watched employment report also showed the unemployment rate ticked up to 4.0% from 3.9% in April, a symbolic threshold below which the jobless rate had previously held for 27 straight months highlighting more workers re-entering the labor force. The unexpectedly strong report made plain that while the labor market has softened around the edges in recent months, its still-solid performance is set to underpin economic growth and keep the Fed on the sidelines while taking more time to begin lowering borrowing costs.

What Does a Downtown Rebound Look Like? (NPR) Big cities across the U.S., more than two years after they began emerging from the pandemic, are questioning how downtowns will evolve due to hybrid work. The report looks to Philadelphia to show how well downtowns are recovering. In many cities, a downtown recovery is strong on evenings and weekends, and statistics show that cities’ downtown populations are actually growing. With goals to continue improving commute times and offering amenities downtown, these areas in cities can continue to come back from the challenges the pandemic caused, making them better places for people to live, work, and visit.

How Cities are Using Federal ARPA Funds to Tackle Housing Affordability (Brookings) This analysis assesses how the nation’s largest cities and counties have used State and Local Fiscal Recovery Funds (SLFRF) to invest in affordable housing development, rental assistance, and eviction prevention programs. As of the end of December 2023, large U.S. cities and counties have used the SLFRF program to invest $6.7 billion in housing projects, accounting for 11% of the $58.8 billion appropriated to date. Roughly two-thirds of these investments have been focused on homelessness services and affordable housing developments. The bottom line: by making the most of federal funds and local policy reforms, governments at all levels can address the complex challenge of housing affordability and work to ensure that more residents have access to safe and affordable housing options.

*Trade 📈*

India and U.S. to Address Barriers to Trade and Cooperation (Economic Times) India and the U.S. committed to address barriers to bilateral strategic trade, technology, and industrial cooperation. The commitment was made at a meeting between the national security advisors of the two countries. Officials also launched a new strategic semiconductor partnership for precision-guided ammunition and other national security-focused electronics platforms.

Geopolitics and its Impact on Global Trade and the Dollar (IMF) After years of shocks, countries are reevaluating their trading partners based on economic and national security concerns. Given the recent history of events, policymakers are increasingly—and justifiably—focused on building economic resilience. But if the trend continues, the world may see a broad retreat from global rules of engagement and, with it, a significant reversal of the gains from economic integration. New trade restrictions have increased sharply—more than tripling since 2019—while financial sanctions have also expanded. The report goes into detail on how trade and investment flows are being redirected along geopolitical lines.

*Industry Trends 💡*

Manufacturing Industry Trends 2024: The Economy, AI, and Supply Chain (Forbes) The manufacturing industry in 2024 is defined by a combination of challenges and opportunities spurred by technological advancements, economic uncertainties, and shifting market dynamics. Despite facing various headwinds, the emphasis on digital transformation, AI, and operational efficiency offers a promising route for growth and innovation. After conducting a series of interviews, the three main takeaways are: this election year, economic concerns are top of mind; supply chain resilience remains top of mind; and technology and innovation are changing the game.

Can AI Answer the Needs of Smaller Businesses? Some Push to Find Out (The New York Times) When generative AI surged into the public consciousness in late 2022, it captured the imagination of businesses and workers with its ability to answer questions, compose paragraphs, write code and create images. Although adoption of AI is rising, only about 5% of companies nationwide are using the technology. While some of the largest companies are finding uses for AI — and devoting money and time to developing more — many smaller companies are just starting to dabble in the technology, if they use it at all. AI use is the greatest in the information and professional services; the research also shows that marketing is among the most common uses for AI across all businesses. Smaller businesses are interested in seeing what other uses AI could offer.

American Solar Panel Manufacturing Capacity Reaches 200-Gigawatt Milestone (SEIA) A record-setting 11 gigawatts (GW) of new solar module manufacturing capacity came online in the U.S. during Q1 2024, the largest quarter of solar manufacturing growth in American history. Massive growth in the utility-scale market is driving record solar deployment figures as the segment added nearly 10 GW of new capacity in Q1. Florida and Texas saw strong utility-scale growth and led all states for new solar capacity in Q1. Other markets like New Mexico and Ohio also had strong quarters, installing 686 and 546 megawatts (MW), respectively. Total U.S. solar capacity is expected to double over the next five years, growing to 438 GW by 2029.

Advanced Packaging is Radically Reshaping the Chip Ecosystem (Boston Consulting Group) One of the most significant new concepts in semiconductor design and manufacturing is advanced multichip packaging, which integrates a multitude of components into a single package. This transformative approach breaks away from the single chip per package model, improving performance and time to market while reducing manufacturing costs and power consumption. For chipmakers, investors, and computing device and equipment makers, the emergence of advanced packaging represents a radical shift in the semiconductor industry landscape. The next generation of industry-leading organizations will be those that realize value creation is migrating towards companies that can design and integrate complex, system-level chip solutions using concepts like advanced packaging.

*Workforce ⚒️*

Incorporating Workforce Development and Upskilling into the CEDS (NADO) Effective Comprehensive Economic Development Strategies, or CEDS, should emphasize the identification, enrichment, and strategic deployment of workforce assets with a focus on job quality and inclusion. By demonstrating an ability to meet evolving workforce needs through data-supported arguments and targeted upskilling strategies, regions can attract and grow businesses and support workers, all while building regional wealth and fostering economic resilience and equity. A new 15-minute video tutorial and accompanying brief from the NADO Research Foundation (NADO RF) discusses how EDDs can best incorporate workforce development and upskilling strategies into the CEDS.

NOAA Builds a Climate-Ready Workforce through Investing in America Agenda (NOAA) The U.S. Department of Commerce and the National Oceanic and Atmospheric Administration (NOAA) announces $60 million in funding to help train and place people in jobs that advance a climate-ready workforce for coastal and Great Lakes states, Tribes, and Territories. The funding will support nine projects around the nation, with $50 million going directly to the projects and $10 million for technical assistance to support the grantees.

Building Opportunities for the Public Sector Workforce (Aspen Institute) State and local governments employed 19.6 million people in 2023. In recent years, public sector human resources managers have reported increased challenges hiring for open roles. For example, the pay gap between the private and public sectors remains, making it harder to attract and retain the best talent. Based on some preliminary research, public sector upskilling efforts appear limited with much of the existing effort is focused on training new and incumbent workers for specific jobs, Building a future-ready public sector workforce will require more than just removing degree requirements in hiring; it means investing in skills-first ecosystems so that existing skills are well recognized, there is a culture of ongoing learning, and an infrastructure present that makes career advancement and reskilling transparent with incentives to participate.

How an Immigration Slowdown Affects U.S. Labor Market, Wages, Economy (Atlanta Fed) The flow of migrants across the United States’ border with Mexico is a contentious issue made more complex by the historic reliance of U.S. businesses on low-wage immigrant labor from Mexico. A protracted slowdown in low-skilled immigration, from its start in 2007 into the COVID-19 pandemic, has affected various aspects of the U.S. economy. The paper relates the decline in low-skilled immigrant labor to subsequent wage increases for low-skilled workers, declining educational advancement by young U.S. workers, and labor shortages in low-skilled jobs that can’t be moved to other countries.

*Business Finance and Incentives 📊*

Rhode Island Commerce Awards $5.4M for Submarine Manufacturing Plant (RI Commerce) Anduril, a national defense contractor will receive up to $5.4 million in redeemable state tax credits in exchange for opening a manufacturing plant, with up to 133 new jobs with a $95,000 salary. The new Quonset facility marks a significant expansion of the company’s autonomous submarine division, based out of Quincy, Massachusetts. The Quonset plant will be able to produce up to 200 of the 19-foot-long, 6,000-pound “Dive-LD” submarines each year. Quonset was chosen due to its proximity to the Quincy manufacturing site, along with relevant in-state companies like General Dynamics Electric Boat.

Minnesota DEED Announces $3.9M for Nine Business Expansions (MN DEED) The Minnesota Department of Employment and Economic Development (DEED) announced $3.9 million in Job Creation Fund and Minnesota Investment Fund awards for nine business expansion projects statewide. The projects are expected to create or retain 225 jobs, and leverage nearly $56.3 million in outside investment. The projects include a multi-site manufacturer of precision machines and fabricated sheet metal components, a medical device manufacturer, and a pastry production facility, among others.

WA Commerce Awards Nearly $40M in Climate Commitment Act Funds (WA Commerce) The Washington State Department of Commerce announced nearly $40 million in grants to cities, counties, municipal utilities, and state and federally recognized tribes to support electrification of homes and businesses. The funding, made possible by Washington’s Climate Commitment Act, will establish and enhance local programs that provide rebates and incentives to households and small businesses to purchase and install high efficiency electric equipment. Commerce received 35 applications for this funding, requesting over $82 million.

U.S. Department of Commerce Invests $2.7M in Perryton, Texas (EDA) The EDA is awarding a $2.7 million grant to the city of Perryton, Texas, to support business growth following natural disasters in the region. This grant will create the Rebuild Perryton Incubator, converting an existing building into commercial space for local businesses impacted by recent tornadoes. This EDA investment will be matched with $625,000 in local funds. This project was made possible by the regional planning efforts led by the Panhandle Regional Planning Commission (PRPC).

U.S. Department of Commerce Invests $1.5M to at White Earth Reservation (EDA) The EDA is awarding a $1.5 million grant to the White Earth Tribal and Community College in Mahnomen, Minnesota, to support healthcare workforce development. This grant will provide mobile medical training units and related equipment to help nursing students prepare for good-paying, in-demand jobs. This EDA investment is expected to create 44 jobs. Tribal Colleges serve students in some of the most isolated and under-served areas of the country. This project was made possible by the regional planning efforts led by the Headwaters Regional Development Commission (HRDC).

The State Economic Development Executives (SEDE) Network engages in regular events throughout the year. State Economic Development.org lists these activities and offers an interactive forum for discussion among peers. The SEDE Steering Committee includes: Sandra Watson (AZ), Chair; Joan Goldstein (VT), Vice-Chair; Kurt Foreman (DE); Kevin McKinnon (MN); Christopher Chung (NC); Andrew Deye (OH); Sophorn Cheang (OR); Adriana Cruz (TX); and Mike Graney (WV).

Allison Ulaky of the Center for Regional Economic Competitiveness (CREC) led the development of this Bulletin; for questions on the content in this Bulletin or for information on the SEDE Network contact Bob Isaacson, CREC Senior Vice President.

State Economic Development Executives Network (SEDE)

State Economic Development Bulletin – Issue 70, June 2024

HEADLINES