The impact of the U.S. economic downturn on mass transportation, public and private, has been profound. Over the past couple of years we’ve seen it take a devastating toll on tour and charter bus operators, with many forced out of business, as well as public transit agencies, many of which have been forced to reduce service, raise fares and, in some cases, lay off employees.
Transit properties have been patiently waiting for an economic recovery that will return badly needed tax dollars to their coffers, but the downturn has persisted longer than expected. In recent months we’ve seen encouraging signs that the health of the economy is returning to normal.
Forecast is encouraging. . .
Reinforcing this notion is James F. Smith, a professor of finance at the University of North Carolina. Smith, who has been called “the most accurate economic forecaster” by the Wall Street Journal, spoke at the annual meeting of the American Public Transportation Association (APTA) in Salt Lake City and sounded an encouraging note of optimism.
Basically, Smith said prosperity is right around the corner. He said the economic outlook for the next several years is excellent. “Good times are coming until about 2010,” he said. In the short term, he believes that the next two years will be the best in the past 20 years.
On what does the professor base his optimism? Smith says the upcoming 2004 presidential election is a key factor. Because many Americans vote with their pocketbooks, Smith believes that President George Bush has set the stage for an economic rebound, with his success in the November 2004 election hanging in the balance. “Americans must feel much better off financially than they do right now,” Smith says.
Smith believes that Bush’s tax reductions in 2001 and 2003 will increase real disposable income per capita — just in time for next year’s presidential election. He also believes that the U.S. economy will create 2 million to 3 million new jobs over the next year or so and that energy prices will decline once Iraq gets its oil production back in line with its capacity. “There are plenty of things to worry about in the world, but the health and robustness of the economy are not among them,” Smith said.
I agree with the professor; I think good times are ahead. I think you probably do, too. But public and private transportation providers need to maintain the efficiencies that have, in many cases, been forced upon them. Just as he believes that good times are ahead for the next seven or eight years, Smith also believes that another downturn will occur eventually.
In fact, Smith warned that another devastating terrorist attack on U.S. soil could throw a wrench into the economic engine that’s just beginning to roar again. And there’s no guarantee that terrorists will not strike again, even though the Department of Homeland Security is taking every reasonable precaution to prevent such an attack.
. . . but complacency is dangerous
Despite Smith’s persuasive arguments that good times are returning, I think we need to press the federal government for greater investment in transit programs. As we know all too well, local and state funding can freely flow — and dry up — without regard to the needs of communities for expansion and modernization of transportation systems.
On Sept. 30, TEA 21 expired without approval of reauthorization legislation. It would behoove the transit industry to renew the call to Congress and the Bush administration for greater investment in transit. We can’t rely on the rekindling of economic growth — no matter how good the prospects are — to provide critical funding for new rolling stock and improvements in aging infrastructure.