Permanent Disruption: Navigating the Road Ahead

Event Overview and Strategic Focus

• The Milken Institute's 2022 Public Finance Forum was held virtually ("The last best Zoom meeting ever") with a pivot to a live stream to expand national reach.
• The forum's core theme is "accelerating innovation that drives outcome-focused leadership" within the $4 trillion public finance sector.
• The event aims to rally cross-sectoral innovators (government, politics, philanthropy, muni bonds, investment) to scale equitable outcomes.
• Three strategic intervention areas were identified: infrastructure deployment (broadband, clean energy), ESG integration in the muni bond sector, and government innovation via adaptive public-private partnerships.
• Key partners include the Volcker Alliance, GFOA, National Association of State Treasurers, and various impact investment organizations.

Macroeconomic Outlook (Elaine Buckberg, GM Chief Economist)

• The U.S. economy surpassed pre-COVID GDP levels by June 2021 and is projected to grow 3.9% in 2022, significantly higher than the pre-pandemic decade average of just over 2%.
• The unemployment rate fell to 3.9% in December 2021, recovering from a 14.7% peak in April 2020, though job gains are slowing due to labor supply constraints.
• Labor market frictions include worker concerns regarding COVID safety, childcare disruptions, early retirement, and reduced immigration.
• Inflation remains the primary economic risk, with headline CPI hitting 7% (up from 5.5% core) in December.
• Inflation is expected to ease in the second half of 2022 as supply chain bottlenecks (freight and auto chips) resolve.
• The Federal Reserve signaled tapering of bond purchases and a potential start to rate hikes in March, with an average forecast of three 25-basis-point hikes (75 bps total), though the speaker predicts 100 bps.
• Omicron variant disruptions may cause temporary growth delays due to worker absenteeism but are not expected to derail the broader economic recovery.

Equity and Social Justice (Maurice Jones, OneTen)

• The current moment is compared to the Civil Rights era of 1963, representing a unique opportunity for the U.S. to address systemic inequities in wealth, housing, and opportunity.
• A stark wealth gap persists: 60-70% of white families own homes compared to roughly 40% of Black families; less than 50% of Black families are banked.
• The OneTen coalition, comprising over 60 companies including GM, has committed to hiring, promoting, and advancing 1 million Black Americans into family-sustaining careers over the next decade.
• A "credential barrier" exists: 79% of jobs paying $60k+ and 71% of jobs paying $40k+ list a four-year degree as a requirement, despite 76% of Black workers and 66% of the total U.S. workforce lacking one.
• OneTen's theory of change involves shifting from degree-based hiring to skills-based hiring to integrate talent currently on the sidelines.
• Successful execution requires public-private collaboration to fund and scale ecosystems including bootcamps, community colleges, and wraparound support (childcare, transportation, mentoring).

Sustainability and Electrification (Elaine Buckberg & Maurice Jones)

• General Motors has committed to zero tailpipe emissions from new light-duty vehicles by 2035 and plans to launch 30 new EVs globally by 2025.
• GM, Ford, and Stellantis pledged to target 40-50% EV sales by 2030, with a current goal of selling over 1 million EVs globally by mid-decade.
• Market research indicates rising EV demand, with 70% of drivers willing to consider an EV in the future.
• Federal infrastructure investments include $7.5 billion for EV infrastructure and a target to fund 500,000 new chargers by 2030.
• Charging infrastructure distribution is projected to be 64% home, 11% workplace, 12% highway, and 14% public/community locations.
• States and municipalities are critical for executing the rollout of highway and community charging infrastructure to support those without home charging access.

Municipal Finance and Blockchain Innovation (Tammy Arnold, Alpha Ledger)

• Over 50,000 municipal entities in the U.S. operate essential infrastructure (healthcare, education, water, transport), yet the sector relies on a century-old funding system prone to inefficiencies and information asymmetry.
• Alpha Ledger is building a digital bond market using distributed ledger technology (blockchain) to democratize municipal funding by allowing direct origination beyond traditional bank intermediaries.
• Blockchain implementation promises to reduce costs, increase data transparency, eliminate duplicate records, and enable fractionalization of assets.
• The initiative is currently operational in the muni loan market, having recorded digital municipal assets for projects in Washington, Oregon, and California.
• The modernization of the digital bond market is framed as an urgent necessity to support climate and social equity transitions at the local level.