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Laxman Pai, Opalesque Asia: The credit rating agency Moody's Investors Service said that most of the largest 25 US cities would be able to weather a recession of similar severity as the 2008-09 downturn without a material adverse credit impact.
The rating agency's analysis shows that 17 of the 25 cities are moderately prepared for a recession, while six cities are stronger and two of the group are weaker.
Moody's looked at four factors to determine a city's preparedness for recession: fiscal volatility, reserve coverage, financial flexibility, and pension risk. Its analysis shows that Boston, Charlotte, Denver, San Antonio, San Francisco, and Seattle scored "stronger," while Chicago and Detroit scored "weaker."
"A majority of local governments have used the broad economic expansion of the past decade to strengthen their finances," says Nicole Serrano, a Moody's VP-Senior Analyst. "Additionally, they have been able to keep their debt and related fixed costs in check."
In terms of fiscal volatility, the rating agency found that most of the largest 25 US cities would not experience a sudden, unexpected drop in revenue of more than 5% in a future downturn, given these cities' last recession experience.
Between 2007 and 2011, the median largest one-year revenue decline was 2.7%, with five of the cities seeing no decline.
Moody's analysis also shows that most of the largest 25 cities have built solid reserves over the past 10 years, wit...................... To view our full article Click here
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