Tuesday marked the five-year anniversary of Detroit’s municipal bankruptcy. On the same day, a Wall Street financial services firm released a new report that gives a bleak assessment for Detroit should another recession hit.
Moody’s Investor Service report analyzed the 25 largest U.S. cities for financial preparedness for the next recession and found Detroit and itrs Midwest neighbor Chicago are the least likely to withstand one. The report monitored each city’s fiscal volatility, reserves, financial flexibility and pension risk.
Detroit’s credit system will face future obstacles. “Pension contributions, fixed costs, revenue volatility and capital needs” are vulnerable, The Detroit News reports.
On a positive note, the report acknowledges that Detroit is an “outlier,” with its current funding reserves.
“If these trends continue, Detroit’s overall preparedness for a future recession will be more in line with major city peers,” the report reads.
The News spoke with Detroit chief financial officer David Massaron, who called the report “sobering.”
"It reflects that the city is still one of the weakest in its standards," he said. "It's a sobering report because it basically recognizes what we have done over the last five years to be in a position to withstand the next time there's an economic contraction."
The most equipped cities were Boston, Charlotte, Denver, San Antonio, San Francisco and Seattle, the study found.