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For immediate release
Contact: Katherine Dibling, Public Affairs Specialist, (215) 574-4119
The Federal Reserve Bank of Philadelphia’s Community Development Studies and Education Department today released the results of the Second Quarter 2012 Community Outlook Survey (COS), which monitors economic factors affecting low- and moderate-income (LMI) households in the region.
The survey asked the 59 participants, whose organizations provide services to LMI households, to evaluate how their clients’ financial conditions had changed from the first quarter to the second quarter of 2012. The survey also asked respondents to give their expectations about these factors for the third quarter of 2012.
“Survey participants continued to see deterioration in the overall circumstances of low- and moderate-income households and, this quarter, observed an overall decrease in job availability for their clients. They also registered concern over funding cuts, barriers to homeownership, and increased demand for their organizations’ services.”
Daniel Hochberg, Senior Research Assistant, Community Development Studies and Education, Federal Reserve Bank of Philadelphia
For the first time in three quarters, respondents observed an overall decrease in job availability relative to the previous quarter, although the decline was modest. Fifteen percent of respondents reported a decrease in the availability of jobs, while 7 percent noted an increase. Fifteen percent of respondents expect more jobs to become available to LMI individuals in the third quarter of 2012, compared with 13 percent who predict a decrease in jobs.
Despite the concern over declining employment opportunities for LMI individuals, the decline in the availability of affordable housing, financial well-being, and access to credit for those households slowed in the second quarter of 2012.
Nineteen percent of service providers reported a decrease in the availability of affordable housing in the second quarter, and 11 percent reported an increase. Nineteen percent expect the availability of housing to increase in the third quarter; another 19 percent expect it to decrease; and 62 percent expect no change.
Seventy-one percent of participants reported that they saw no change in the financial well-being of LMI households in the second quarter, and 25 percent saw a decrease. Sixteen percent expect to see an improvement in the third quarter. Ninety-nine percent of the respondents reported that access to credit had decreased or stayed the same. Fourteen percent expect to see improvement in the third quarter.
Most service providers (65 percent) saw demand for their services increase from the first quarter of 2012. Sixty-eight percent expect demand to continue to increase in the third quarter.
Fourteen percent reported an increase in their capacity to meet their clients’ needs; 86 percent reported a decrease or no change in capacity since the first quarter. Twenty-three percent expect to see an increase in capacity in the third quarter.
Five percent indicated that funding had increased; 95 percent reported that funding had decreased or stayed the same in the second quarter. Twenty percent of the respondents expect to see an increase in their funding in the third quarter, while 41 percent expect it to decrease.
Each quarter, we ask survey participants to select the challenges they believe are most detrimental to LMI households’ access to credit, the availability of affordable housing, and their organizations’ financial sustainability.
The top three challenges from previous surveys remain the same in the Second Quarter 2012 survey. Most respondents cited lack of cash flow as the greatest barrier to credit for LMI households. In addition, lack of government and private grant funding and overall market conditions have made it difficult for organizations to pay employee salaries and have forced them to lay off staff. Respondents also cited underwriting standards and credit ratings, as well as a lack of financial knowledge as other obstacles threatening their organizations’ effectiveness.
The Federal Reserve Bank of Philadelphia helps formulate and implement monetary policy, supervises banks and bank and savings and loan holding companies, and provides financial services to depository institutions and the federal government. It is one of the 12 regional Reserve Banks that, together with the Board of Governors in Washington, D.C., make up the Federal Reserve System. The Philadelphia Federal Reserve Bank serves eastern Pennsylvania, southern New Jersey, and Delaware.