As with the GCI, we will take a quick tour of the GCO top five before moving on to broader observations about the list:

London retains its number one spot for the fourth year in a row, despite a steep decline in its governance ranking. Increases in personal well-being and innovation helped.
Paris takes the second position for the second consecutive year. The City of Lights rose by 14 places in the ranking for personal well-being.
Luxembourg lifted itself from 11th to third place, in part on the strength of its improvement in the innovation dimension.
Munich is down one spot from the year before, despite a strong showing and a rise of 30 places in the innovation dimension.
Stockholm stepped up a rung by virtue of a personal well-being ranking that shot up from 44th place to 17th. This made up for declines in economics and governance.

The back half of the GCO top 10 is notable for the arrival of New York and Copenhagen, both of which markedly improved their standing over 2021. New York moved up from 18th to sixth; Copenhagen found itself in eighth after vaulting 13 spaces from 21st position. Conversely, two Asian megacities took steep tumbles out of the top 10—Singapore fell 10 places, from 10th to 20th, while Tokyo plunged further still, from seventh to 25th.

In all, 51 cities—nearly a third of the sample—lifted their ranking more than six places within the past year. Seventeen of these are in China. Hangzhou leapt upward by 24 places to the 40th spot. The city has a deep talent pool and strong manufacturing base, and over the next five years will play an important role in China’s national strategy to boost its manufacturing sector and shift toward a technology-driven growth model. Shenyang, another industrial and commercial giant, recorded a similar upward bounce, rising by 24 places to 56th.

In keeping with Europe’s domination of the top five slots, other cities on the continent also posted sharp gains. Oslo and Barcelona jumped 18 and 10 places, respectively, to join the top 30. Berlin moved up 10 places. Helsinki jumped 26 spots, from 43rd to 17th. Given the current state of world events, the high rankings of several European cities on both the Outlook and the Index may raise eyebrows. However, this can be attributed to a lag in data, and we anticipate much more variation in the rankings of European cities next year.

Finally, several North American cities also showed strong gains. San Francisco rose by 12, and Minneapolis by 16. Monterrey tallied the biggest positive shift on the entire GCO, jumping by 35 to 99th.

A look ahead: facing an economic storm

While the GCI and GCO show the current and potential future perfomance of global cities, we also look closely at the conditions in which metropolitan leaders may be operating over the next 12 to 18 months. As mentioned at the outset of this report, city leaders face an exceptionally complex and challenging set of economic conditions. They will need to find novel and effective approaches to such problems as economic upheaval, uncertain access to human capital, and the potential erosion of innovative edge as entrepreneurs and creators consider moving out of the largest (and costliest) urban centers.

While the great cities of the world are immensely varied and distinct from one another, they share a cluster of specific policy imperatives that each will need to confront to sustain and maximize their global city status—and far more importantly, the well-being of their own people. In the context of a shifted, post-pandemic relationship between worker and workplace, the competition among cities to attract talent and corporations has taken on new, complex dynamics, many of which are still unfolding.

The next section will explore four primary dynamics that capture the dimensions of the near-term economic challenge: persistent inflation, slowing economic growth, rising debt risks, and worsening inequality. This final section of the report will also consider key pathways of action—specific policy measures that leaders can adopt to address these dynamics, introduce mechanisms of adaptation, and ultimately foster greater resilience.

The near-term strategic operating environment facing city leaders

We’ll start by taking a closer look at the four primary dynamics mentioned above, before turning to specific policy prescriptions.

Inflation: how long will it linger?

Over the past two-and-a-half years, a rare constellation of events has created the most extreme inflationary conditions in 40 years. In a very compressed time frame, we have seen the transformed spending habits of consumers during a global pandemic; extreme disruption of global supply chains in light of near-universal pandemic lockdowns; historic (and often poorly calibrated) levels of fiscal stimulus; and the outbreak of a conflict that has threatened global supplies of food and energy. These poorly matched spikes in demand and breaks in supply have produced a challenging and unpredictable economic environment.

Over the next 12 to 18 months, these inflationary conditions are likely to continue, and may even worsen. New research shows that the current extraordinarily tight labor markets are likely to contribute significantly to sustained inflationary pressures. At the same time, the ongoing conflict in Ukraine, which seems unlikely to end in the near term, will continue to disrupt supply chains for essential goods. The International Monetary Fund (IMF) forecasts that global inflation will increase to 8.3 percent in 2022—well over twice the average rate of inflation between 2010 and 2020.

Despite near-universal hikes in interest rates by central banks, supply-side inflationary dynamics are unlikely to ease in the near term. At the Federal Reserve Bank’s recent Jackson Hole Economic Symposium, Federal Reserve chair Jerome Powell asserted higher interest rates would persist for some time and emphasized the negative ramifications of easing policy too soon.

For city leaders, the well-being of their residents in the face of commodity-driven inflation is a primary concern. The impacts will continue to be felt most by lower-income groups who spend some 36 percent of their income on food—a far greater share than the 8 percent spent on food by higher earners. Similarly, the problem of steeply rising housing costs will only become more severe. Mortgages and rents represent the largest single monthly expense for most people, and the sharp increase in this expense has tightly squeezed middle-class and poorer residents of cities worldwide.

This phenomenon is particularly acute in the dominant and desirable cities featured in this report, and is a profound threat to cities’ urban fabric, as artists, schoolteachers, nurses, police officers, small-business owners, and others are priced out of the very cities they do so much to augment. Cities that fail to address housing inequality may see virtual and remote working facilitate the outflow of talent, as would-be residents choose less expensive areas.

For city leaders, these conditions will lead to increases in municipal expenses, and will compel hard choices regarding public expenditures. As demand for social services is likely to rise in the coming period of economic volatility, so will expenses for city departments (partially due to tight labor markets), resulting in an overall rise in municipal spending.

Stagnating growth: the prospect of a continued global economic slowdown

Despite an initial acceleration of economic growth out of the pandemic-induced recession, and the projections of continued strong growth in 2021, the world is now in a stark economic slowdown. In the first half of 2022, the IMF repeatedly revised its global growth rate forecasts downward, falling from a 4.4 percent projection in January to 3.2 percent by July. Looking ahead, 2023 is expected to see a rate of only 2.9 percent. More than two-thirds of CEOs surveyed in May (68 percent) expected recession in the coming year. Some experts warn of a coming period of stagflation—the economic condition defined by high inflation, a slow pace of economic growth, and high unemployment.

Such an outcome is by no means certain and the economic slowdown comes amid mixed economic signals. Consumers continue spending and unemployment is at historic lows—neither of which is a traditional signal of economic strife. Nevertheless, uncertainty around the health of financial markets, the effectiveness of central bank tightening measures, and the recovery of supply chains casts a pall over near-term growth prospects. The troubled global geopolitical landscape only adds to the concern.

Any protracted stagnation would affect the economic well-being of low-income individuals and small-business owners. City leaders will face pressure both to support small businesses and to retain (or entice) large employers. A further slowdown in growth would threaten the vibrancy of downtown areas and high streets already weakened from years of COVID-19-related shifts toward online shopping and suburbanization.

The effects of weak economic growth, including an associated rise in unemployment, would have grave consequences for the livelihoods of residents and for municipal budgets as tax-revenue prospects diminish and demand for social support services grows.

The challenge of debt: the effects of monetary tightening

In the first quarter of this year, global debt rose to a new record of more than $305 trillion. This represents more than 350 percent of global GDP. While overall global debt has been steadily climbing over the past three decades, a sharp increase occurred in 2020, driven by a boost in government spending to address COVID-19. Public debt now accounts for more than 40 percent of total global debt.

Over the next 12 to 18 months, the challenge of servicing debt will grow as a result of further expected interest rate hikes. Debt risks are forecast to grow disproportionately for emerging markets and developing economies bearing dollar-denominated debts. In particular, federal reserve rate increases are known to deepen the risks for nations with poor debt profiles.

For city leaders, this challenging debt environment is a major concern. Municipal bonds, which constitute a varying though often substantial portion of city debt, are highly dependent on interest rate levels and on the state of the economy. Therefore, tighter monetary conditions will see the costs of municipal borrowing continue to go up as bond yields rise.

During the first half of 2022, because of increasing economic volatility, investors have pulled $87 billion from the US municipal bond market, resulting in a record first-half loss. Under such conditions, leaders will face increasing difficulty in funding infrastructure and other projects vital to long-term city resilience and health.

Worsening inequality: greater economic and political risks

The average gap between the top 10 percent and bottom 50 percent of income earners within countries has almost doubled over the past two decades. The disparity is even more glaring within cities. Recent United Nations research found that in 36 countries out of 42 studied, the Gini coefficient of income inequality is higher in urban areas than in rural ones. A vast literature describes the costs and consequences of such economic inequality, including social inequity and political unrest.

The situation is not improving. Inflation will continue to have an outsized impact on those at the bottom of the economic ladder, while the impacts of fiscal consolidation—the policies aiming to reduce government deficit and debt accumulation—will also hit lower-income individuals hardest.

Already, cities are often inhospitable environments for those at the lower end of the economic spectrum. One study of 200 cities found that 90 percent had become unaffordable in terms of the relationship between home prices and median incomes. At the same time, research has found that inequality makes recessions even more likely. This self-reinforcing negative spiral is therefore not only a concern for the present but also a threat that needs to be addressed for the sake of longer-term economic and social outcomes.

Deepening inequality is a matter of utmost importance for city leaders. It is correlated with higher crime rates and lower reported levels of happiness, and there is a negative relationship between urban inequality and the growth of both city-level income and population. Staving off any increases in inequality, and then narrowing the gap between those with the most and those with the least, is a core requirement of urban health.

Building resilience ahead of economic turbulence: near-term pathways of action for city leaders

In this period of economic instability and uncertainty, city leaders can rationalize spending to ensure public resources are used most efficiently in the areas of greatest need, while also expanding sources of revenue to ensure fiscal health. They can simultaneously continue to invest in the well-being of their residents, particularly those most likely to suffer in any economic crisis.

This is the perpetual balancing act required of city leaders. To achieve it, they need policy options that can open up new revenue streams, new sources of savings, and new ways of providing necessary services. The following eight concepts provide such options. Each includes a real-world case study of the policy in action.

Increase revenue and equity with targeted non-tax revenue

In a further economic slowdown, cities will struggle to collect revenue, putting greater strain on what are already in many cases overly tight budgets. In addition, cities could see a reduction in revenue from penalties, fines, and fees, such as those incurred for minor traffic or parking violations, as economic and social activity in city centers and high streets diminish.

Communities under economic pressure are less able to pay these tickets on time, or perhaps at all. Such unpaid sums constitute a significant loss of revenue for many cities. In 2018, outstanding charges of this nature totaled $275 million in Chicago alone.

The volume of such non-tax revenue varies from place to place, but it tends to account for roughly 20 to 30 percent of city revenue. City leaders have a vested interest in enforcing and collecting these revenues but without setting rates so high as to encourage scofflaws or force lower-income payers to choose between settling a municipal fee and putting a meal on the table.

Targeted pricing mechanisms for non-tax revenue sources may offer a path forward. The penalties, fines, and fees that constitute a city’s non-tax revenues are typically flat, and assessed without consideration for an individual’s ability to pay. They are therefore often deeply regressive. A targeted mechanism known as segmented pricing enables the government to recognize the variation in individuals’ discretionary income, and adjust penalties, fines, and fees in accordance with their ability to pay.

This approach is equitable and, evidence suggests, often results in more fees collected. A study from the University of Chicago demonstrates that segmented pricing can increase municipal revenues by improving payment compliance rates. Segmented pricing in this case becomes an equity-promoting measure that benefits a city’s residents, particularly during periods of inflation and economic turbulence, when real incomes are losing value and income security is at risk due to potential recession.

Case study: City of San Francisco child-support pilot

A pilot program of targeted debt relief studied by the Urban Institute showed an increase in payment compliance as a result of targeted pricing. When the San Francisco Department of Child Support Services altered the amount of child support debt parents owed to adequately reflect family income levels, payment rates increased from 18 to 28 percent. With fairer and more manageable debt levels, parents made more consistent and timely payments.

Expand access to capital with aggregated platforms

Tighter global monetary conditions and growing financial market instability will continue to raise the cost of municipal borrowing—a significant source of funding for cities, especially for infrastructure requirements. Municipalities already struggle to find adequate funding for infrastructure projects, and the global infrastructure gap is expected to reach $15 trillion by 2040.

The accelerating effects of climate change—including extreme heat, intensified storm activity, and flooding—make this gap increasingly problematic for urban areas from Miami to Mumbai. Infrastructure investment, however, is vital not only to the daily functioning of a city, but also for attracting and retaining the companies that play a major role in local economies.

This standing problem of unmet infrastructure funding needs is not from a lack of investable global capital, as global institutional investor savings amounted to $119.5 trillion in 2021. Rather, the gap is due to an inability to connect capital to infrastructure projects. The level of risk associated with certain infrastructure investments is a major challenge for investors. Taken solely on their own specific terms, individual-case investments in metropolitan infrastructure can easily appear too speculative to attract sufficient capital.

The answer to this problem is the classic investment strategy of pooling and diversification—in this case with an aggregated platform. Aggregated platforms are special financing vehicles that enable investors to buy into a varied portfolio of opportunities, resulting in lower risks for them and easier access to funding for cities.

Aggregated platforms can be owned by a national government, subnational governments (such as states, provinces, or cities), or even by third parties such as pension funds. Functioning as cooperative banks, aggregated platforms borrow money from domestic and international markets on behalf of the municipalities they represent. The UK Municipal Bonds Agency is an example of an aggregated platform that raises diversified sources of funds on capital markets for local authorities.

In a period of high interest rates and financial market instability, aggregated platforms are an opportunity for cities to secure funding for infrastructure projects by improving their ability to access global capital at lower borrowing rates—an imperative given the tight financial conditions cities are likely to face in the near future.

Case study: Kommuninvest

Kommuninvest is a pioneering aggregated platform developed by Swedish municipalities back in 1986. It now has more than 294 participating municipalities and regions, and a strong track record of enhancing borrowing resilience for its member communities. Most forms of local government borrowing declined worldwide during the 2008 Great Recession as financial markets slumped. However, municipal borrowing through Kommuninvest actually grew during that period, as it had during previous recessions.

Tap carbon as an alternative revenue stream to fund green infrastructure

Climate change is significantly raising the stakes for cities seeking to improve their physical infrastructure. However, a potential policy solution represents a twofold response to the climate crisis: simultaneously helping cities fund the infrastructure to help them cope with extreme weather events, and generating incentives to slow or even reverse the carbon pollution that causes climate change in the first place.

The policy solution is embodied in the concept of the carbon market, which addresses a persistent flaw in the financial system. The flaw is that the full economic benefits of green investment are often not fully reflected in market prices. This diminishes the near-term incentive to make such expenditures however necessary they may be to preserve the economic health of a community over the slightly longer term.

Carbon markets increasingly offer an alternative potential revenue stream for cities. They emerge when a city creates infrastructure that reduces carbon emissions, creating the opportunity to sell carbon credits to high-carbon-emitting companies that must purchase carbon credits to meet emissions targets. This financing mechanism can protect green infrastructure projects vital for city resilience that might otherwise be postponed in the current period of economic turbulence and tightening government budgets.

The financing of green infrastructure projects through sales of carbon credits has become increasingly viable with new rules on the provision of carbon markets under Article 6 of the Paris Agreement. Hammered out last year at the United Nations Climate Change Conference in Glasgow, the new guidelines on mandatory regulatory regimes established by governments are also expected to have a deep impact on voluntary markets. In these markets, carbon emitters can choose to offset their emissions through purchases of carbon credits regardless of geographic considerations.

Such green energy measures have the sun on their face and the wind at their back, so to speak; carbon pricing revenues were already up by almost 60 percent in 2021. The Taskforce on Scaling Voluntary Carbon Markets forecasts an increase in demand for carbon credits by a factor of 15 by 2030, providing a massive and fast-growing source of capital for pro-sustainability infrastructure developers. The new Inflation Reduction Act signed into law in the US in August may prove a further boon by increasing the tax credit for capturing carbon and making it available for a broader range of projects.

Case study: California

While being implemented in some cities around the world (notably Tokyo), carbon as a source of revenue has been perhaps most successfully tapped by California. Launched in 2013, the Golden State’s program has put it on track to reduce its greenhouse gas emissions by an additional 40 percent by 2030. The California Air Resources Board’s May 2022 joint auction raised just over $1 billion, to be deposited into the California Greenhouse Gas Reduction Fund.

Recover public value generated by public action

As cities seek new paths of revenue generation, they can find ways to use the resources they already have to generate greater value for the city and its residents. One exceptionally valuable resource is the land on which a city sits—land that has become phenomenally more valuable by having a dense urban settlement on it.

Currently, city governments typically capture very little of this increase in land value, including the increase directly derived from such publicly funded measures as infrastructure improvements or administrative changes in land-use regulations. To cite just one of innumerable examples worldwide, the extension of the London Underground Jubilee rail line generated a 52 percent increase in land value for those with newly convenient access to public transit, yet the community investment levy applied to the project generated far lower rates of return of between 4 and 12 percent.

Now may be an opportune time for cities to seek a far higher return on their most fundamental physical asset. Savills is one of the world’s leading property agencies. Its 2022 Outlook report showed that 73 percent of surveyed investors expected to increase their investment in property over the coming 12 months.

Land value capture (LVC) helps city leaders attract more of this available capital. This policy tool enables city municipalities to garner a fuller share of the land value increases generated by public interventions. This can occur either fiscally (through development fees that fund infrastructure and public improvements at the discretion of the municipality) or as in-kind expenditures (through stipulations that developers provide social goods, such as low- or moderate-income housing, in exchange for construction rights).

LVC policies enacted as part of a comprehensive and coordinated planning cycle are likely to work best. Rather than attempting to quantify fragmented private development in an ad hoc manner and apply appropriate taxes or fees, approaches that plan real estate development alongside public services can be more precisely calculated and enable land value to be captured more accurately.

In addition, as LVC policies expand the returns on public infrastructure investments, they can also be used to achieve additional social goals, including the sustainable and equitable development of urban areas, or the extension of road and transportation connectivity into low-income neighborhoods to increase access.

Case study: The Mass Transit Railway Corporation of Hong Kong

Hong Kong’s Mass Transit Railway Corporation (MTR) is among the world’s leading examples of direct LVC. Unlike most other metro systems worldwide, which depend on government subsidies to provide public goods, MTR (now listed on the Stock Exchange of Hong Kong although still largely government-held) covers its own costs, and is highly profitable. By marrying a real estate business with its metro-development mission, MTR has been able to derive revenues from profit-sharing with private developers, and from renting and managing MTR-owned properties. In one particular period of growth, MTR was able, through property-related operations, to generate almost twice the amount of money spent on railway construction.

Protect the most economically vulnerable with targeted guaranteed-income programs

In his August remarks at the Jackson Hole Economic Symposium, US Federal Reserve chair Jerome Powell cautioned that the fight against inflation would likely require “a sustained period of below-trend growth” and that the policies enacted would “bring some pain to households and businesses.” In short, there is a real chance that inflation-fighting policies could interact with multiple other global factors to increase the odds of an economic downturn.

Even in a mild recession, unemployment and hardship are unequally distributed. In a more severe downturn, this disparity can be even more acute. During the Great Recession accompanying the financial crisis between 2007 and 2009, the bottom 10 percent of income earners suffered a relative loss of income 2.5 times larger than the top 10 percent of earners.

Targeted guaranteed-income programs, which provide direct monetary support over a specified time period, offer a way to cushion lower-income city residents. Targeted guaranteed income is distinct from universal basic income due to its narrow focus on those most in need, providing monetary relief to specific, thoroughly vetted individuals, families, or segments of the community. In this way, targeted guaranteed income directly tackles the issue of socioeconomic inequality. As short-term financial stability has been shown to promote long-run security, targeted guaranteed-income programs can both protect a city’s most vulnerable residents and improve the city’s overall economic resilience.

Such programs represent a less expensive way for local governments to provide more flexible and often more efficient uses of aid for recipients. A trial of no-strings-attached income programs in New York City found that the number of mothers forced to borrow in order to pay an emergency expense was reduced by 18 percent, while overall savings and access to childcare increased.

Far from constituting an additional drain on public finances, a targeted guaranteed-income program can improve municipal financial health by reducing demand for social services down the line. Giving the lie to the notion that such no-strings payments foster indolence, pilot programs have been shown to actually boost employment levels by giving recipients the time and the margin they need to find new jobs or better ones. This boosts citywide employment levels, enhancing local economies while also reducing the need for services.

Case study: Stockton, California

In 2019, a randomized controlled study of the benefits of targeted guaranteed income was undertaken in Stockton, California. The results, published in 2021, revealed that the most significant effect associated with the program was on employment status. In one year, the rate of full-time employment among recipients increased by 12 percentage points.

Overcome inequality by connecting charitable giving to immediate need

Even the most thoughtfully conceived and precisely targeted guaranteed-income program is unlikely to cover the full needs of a city’s lower-income and lower-middle-income residents. There remains an irreplaceable role for private charitable giving, but this longstanding source of support has been threatened by the economic turmoil of recent years.

Studies of the financial crisis and other economic events have shown that charitable giving tends to decrease in times of economic hardship. However, this need not always be the case. The early months of the pandemic saw a rise in giving from those able to afford it. One plausible theory is that COVID-19 triggered donors’ sense of solidarity with their own communities as they and their neighbors confronted a common challenge.

This may suggest a way for cities to marshal the charitable largesse of their people for the benefit of the less fortunate among them. With appropriate behavioral incentives, cities can encourage and enable residents to support one another by giving potential donors a convenient and compelling vehicle for channeling that support to individuals and families within their own communities.

For example, imagine if residents who were struggling financially could anonymously upload their unpaid bills to a city-backed information portal, and benefactors could (anonymously, if they choose) pay off all or part of those bills with a simple electronic payment. Under such an initiative, a municipality could create an online donation platform to verify that the beneficiary is unable to pay the bill in question. The verification would reassure would-be donors that their gifts were not being exploited or wasted.

Such platforms allow the municipality to harness philanthropic support from the community for struggling households that might otherwise require direct financial support from the municipality. Programs of this kind can also help forge a stronger sense of community cohesion and solidarity during periods of economic hardship.

Case study: Askida Fatura

At the start of the pandemic, Istanbul created an online, anonymous donation platform called Askida Fatura. The platform allows residents to upload unpaid bills anonymously and benefactors can donate anonymously, providing relief directly rather than through a charitable organization.

Several other municipalities in Türkiye have replicated this platform, and more than $3.5 million worth of bills have been paid for so far through such systems. A similar project has taken place in Detroit, where an NGO was founded during a water crisis to facilitate donations to assist with unpaid water bills.

Reform intra-city transit with universal basic mobility

Energy price inflation disproportionately affects lower-income residents who tend to have the longest commutes. They are also less likely to have jobs that can be done at home and are relatively unable to afford the most fuel-efficient cars. A Brookings Institution study of commuting expenses found that such costs constitute 6.1 percent of disposable income for lower-income workers, compared to an average of 3.8 percent for other workers.

It would be a fallacy to assume that the harm of rising fuel costs is by any means limited to the poor. Even for the middle class, transportation inflation cuts deeply into discretionary incomes. It also compromises citywide prosperity by discouraging residents from visiting downtowns and vital commercial districts, either as workers, shoppers, or patrons of nightlife venues.

In response to this challenge, city leaders can consider universal basic-mobility programs that provide a minimum level of transport accessible to all members of society. Cities could subsidize public transit for residents or increase the availability of micromobility platforms, such as e-bikes and scooters. The fact that 80 percent of urban trips are over a distance of less than two miles makes micromobility a highly attractive alternative to automobile travel, especially with the emergence of well-funded private e-bike and scooter companies that could readily serve as vendors for such a program.

Investing in micromobility provides not only an additional alternative to automobile transport, but also complements and encourages the use of public transport by addressing the last-mile issue, although not for many elderly or disabled residents. This may perhaps be accounted for through ride-sharing, van pickup services, or other means of connecting these individuals with transit.

Recent reports have shown that citizens become reluctant to use buses and trains when they are required to walk more than a quarter mile to or from the nearest station. Universal basic-mobility programs thus have the potential to address rising fuel costs, promote the gradual return to in-person work, and accelerate cities’ energy transition.

Case study: Tel Aviv

Tel Aviv, currently ranked 16th on the list of the world’s most congested cities, has undertaken significant investments to improve the availability of micromobility. The city aims to double its bike paths to 350 kilometers by 2025. Currently, the use of e-bikes and scooters in the city replaces close to one million automobile rides monthly, resulting in significant reductions in carbon emissions.

Empower residents with financial counseling as a municipal service

As the world enters a potentially protracted global economic slowdown, households across the income scale are going to be negatively affected, not just a city’s poorest. Should the battle against inflation result in a serious recession, as some leading economists warn is likely, greater unemployment can be expected. At a time of pervasive inflation, this would present a stiff additional challenge to the financial health of low- and middle-income households.

In response to this challenge, city leaders can offer financial counseling as a municipal service to their residents to support and improve financial literacy and health. A municipal financial counseling service could offer residents free advice on improving their financial health, in one-on-one settings; via classroom or online training; or through some combination of these approaches. Professionally trained financial advisors could help qualified candidates manage debt payments, increase savings, and build credit.

Crucially, this approach provides a cost-effective means of offering services that empower their recipients to help themselves, rather than simply offering a handout. Giving city residents greater tools and skills with which to manage their own financial futures provides an all-important sense of agency, while reducing the potential for future dependence on public safety-net programs. It is a humane and pragmatic approach that strengthens civic resilience at all levels.

Case study: Cities for Financial Empowerment Fund

A group of nearly two dozen US municipalities have come together to form the Cities for Financial Empowerment Fund. This coalition aggregates resources to provide better services and collectively advocate for policy priorities, including the establishment of financial empowerment centers in cities nationwide. Over the past decade, this collaborative model has helped 133,000 recipients, reduced their collective debt by $192 million, and increased collective savings by $38 million.

Conclusion

City leaders have a daunting task with an outsized role—positive or negative—in determining how the residents of their cities weather the anticipated economic storm ahead. In a time of such volatility and uncertainty, prudent decision-making is more important than ever.

The past two years of necessary—but frequently reactive—policymaking has shown that well-intentioned policies can lead to painful after-effects. Simply solving the immediate problem can contribute to worsening existing challenges in the medium term or creating new issues altogether.

As policymakers seek to steer their city institutions and safeguard the well-being of their residents, they can do so in ways that ensure longstanding and even existential imperatives—such as those related to climate change—do not take a backseat to the urgent economic challenges some may face. Instead, they can push for integrated and intersectional solutions that look to address the many challenges we face from a variety of angles, and convert this moment of potential crisis into one of resilience, reinvestment, and regrowth.

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