May 19, 2009

Create your own stimulus for the local economyBy Don NelsonOnlineAthens.com

An individual’s $20 expenditure at a neighborhood hardware store can translate into twice that amount from the ripple effect the purchase creates in the local economy.

Ripples from thousands of people – each spending $20 on the same day – could provide a significant financial stimulus to a town, economic experts say.

That’s the premise behind a “$20 on the 20th” campaign the Athens Banner-Herald is promoting to encourage people in the Athens area to each spend $20 at local businesses on Wednesday. The campaign calls for consumers to buy local with $20 they either had in savings or would have spent on the Internet or out of town.

“The economic impact would be absolutely tremendous,” said Doug Bachtel, demographer and professor of housing and consumer economics in the College of Family and Consumer Economics at the University of Georgia. “We probably have about 40,000-some-odd households in Clarke County, and if each was spending $20, the multiplier is just astronomical.”

Money spent on goods and services in a certain geographic area tends to recirculate in an economy. After a customer buys a product or service, a business owner or employee in turn will take the money and spend it on gas or groceries, for instance.

“Multipliers vary greatly by the type of products,” said Jeff Humphreys, director of the Selig Center for Economic Forecasting, part of UGA’s Terry College of Business.

The highest multipliers come from services – from haircutting to landscaping – because most of the cost goes toward paying workers, Humphreys said.

“If you hire someone local to clean your gutters, they are not importing (supplies, equipment or labor) from outside the community,” he said.

Likewise, when someone buys a meal at a local restaurant, the meal was created here rather than outside the community, Humphreys said.

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