Markets
From Coast to Coast: How U.S. Muni Bonds Help Build the Nation
Over 200 Years of U.S. Municipal Bond History
Our modern society shares few characteristics with the 1800s. In the last two centuries, styles have changed, laws have evolved, and cities look entirely different. However, one thing that has prevailed is the way state and local governments finance public projects.
Far from a new invention, municipal bonds have been shaping U.S. communities for more than 200 years. In today’s infographic from New York Life Investments, we take a look back at their long history.
Early Beginnings – 1800s
1812: First Official Issue
New York City issues a general obligation bond for a canal.
1817-1825: Facilitating Economic Growth
A few years later, 42 separate bond issues help fund the successful Erie Canal project.
1843: Growing Popularity
Municipal debt sits at about $25 million. Over the next two decades, this total increases exponentially to fund urban improvement and free public education.
Circa 1865: Railroad Expansion
For a few years after the American Civil War, a great deal of debt is issued to build railroads.
1873: The Panic of 1873
Excessive investment in railroads, real estate, and nonessential services leads to the downfall of the large bank Jay Cooke and Co., smaller firms, and the stock market. Many state and local governments default, temporarily halting municipal financing.
The 20th Century
1913: Exception Granted
U.S. Congress introduces a permanent federal income tax, and specifically excludes municipal bond income from taxation.
Note: today, a portion of municipal bonds are taxable.
1930: Expansion in the West
In the midst of the Great Depression, voters approve $35 million in funding to build the Golden Gate Bridge.
1939-1945: Diverted Resources
With financial resources directed to the military in WWII, municipal debt falls. By 1945, total debt sits at less than $20 billion.
1960: Exponential Growth
Only 25 years later, outstanding public debt—the total amount owed to creditors—more than triples to $66 billion.
1971: Investor Protection
Municipal bond insurance is introduced. That same year, insured municipal bonds finance the construction of hospital facilities in Alaska—bringing essential services and investment opportunities to a remote area.
1975: Marketplace Stewardship
Bringing further reassurance to the municipal bond market, the Municipal Securities Rulemaking Board (MSRB) is introduced to establish regulations for dealers, and for advisors at a later date.
1981: Continued Growth
Outstanding public debt reaches $361 billion.
Modern Day
2009-2010: Economic Recovery
More than $181 billion of federally-subsidized Build America Bonds are issued by state and local governments to help stimulate the economy after the financial crisis.
2016-2018: Investor Dollars at Work
In recent years, state and local debt has financed many important projects across the country.
- 2016: The New York State Thruway Authority issues $850 million in bonds to finance a portion of the new NY Bridge Project.
- 2017: California’s Department of Water Resources issues $428 million in bonds for the maintenance and construction of its water management infrastructure.
- 2018: The Denver International Airport issues $2.5B in bonds to finance capital improvements, the largest airport revenue bond in municipal bond history.
2018: Helping People and the Planet
Sustainable applications for municipal bonds continue to grow, with Californian voters approving $2 billion in financing for supportive housing. In addition, state and local governments issue $4.9 billion in U.S. municipal green bonds.
Today: A Sizable Investment Opportunity
As financing spans the nation, the U.S. municipal bond market is both large and active:
- $3.8 trillion capital market
- One million outstanding securities
- $11.6 billion in par traded per/day
- 40,000 daily trades
Not only that, municipals have offered a compelling after-tax yield. For example, high yield municipals offered 121% of the after-tax yield of high yield corporates as of September 30, 2019.
The Foundation of Infrastructure
For over 200 years, municipal bonds have provided critical financing to build hospitals, schools, highways, airports, and more. Today, two out of three infrastructure projects in the U.S. are financed by municipal bonds.
Additionally, municipals have weathered almost every economic storm, providing much-needed capital stimulus during some of the deepest U.S. recessions. As history continues to unfold, municipals hold great potential for issuers, communities, and investors.
Markets
Visualizing the Major Product Exported by Each U.S. State
Canada is the top destination for products from 21 states.
Visualizing the Major Product Exported by Each State
The U.S. is the second biggest exporter in the world, accounting for over 8% of global exports.
In this graphic by NeoMam Studios, we analyze the primary product exported by each state, as well as its main destination, utilizing data from the U.S. International Trade Administration.
Canada: The Primary Destination
Canada serves as the largest export market for most of the Midwest, while Mexico holds the top spot as the export destination for much of the Southwest and Southeast. Additionally, Canada stands out as the primary importer of products from 21 states, with China and Germany trailing behind as notable destinations.
State | Destination | Top Product Exported | Value (USD) |
---|---|---|---|
Alabama | 🇩🇪 Germany | Transportation equip. | $3,649M |
Alaska | 🇨🇦 Canada | Minerals | $576M |
Arizona | 🇲🇽 Mexico | Minerals | $1,760M |
Arkansas | 🇨🇦 Canada | Processed Foods | $246M |
California | 🇨🇦 Canada | Computer & Electronics | $5,093M |
Colorado | 🇰🇷 South Korea | Processed Foods | $545M |
Connecticut | 🇩🇪 Germany | Transportation equip. | $1,581M |
Delaware | 🇰🇷 South Korea | Appliances | $419M |
Florida | 🇬🇧 UK | Chemicals | $2,447M |
Georgia | 🇨🇦 Canada | Machinery | $1,629M |
Hawaii | ðŸ‡ðŸ‡° Hong Kong | Transportation equip. | $68M |
Idaho | 🇹🇼 Taiwan | Computer & Electronics | $394M |
Illinois | 🇨🇦 Canada | Transportation equip. | $4,517M |
Indiana | 🇨🇦 Canada | Transportation equip. | $6,561M |
Iowa | 🇨🇦 Canada | Machinery | $1,598M |
Kansas | 🇲🇽 Mexico | Agricultural | $1,543M |
Kentucky | 🇨🇦 Canada | Transportation equip. | $3,630M |
Louisiana | 🇨🇳 China | Agricultural | $11,300M |
Maine | 🇨🇦 Canada | Oil & Gas | $504M |
Maryland | 🇫🇷 France | Transportation equip. | $949M |
Massachusetts | 🇨🇳 China | Machinery | $1,298M |
Michigan | 🇨🇳 China | Transportation equip. | $15,361M |
Minnesota | 🇨🇦 Canada | Petroleum & Coal | $2,787M |
Mississippi | 🇵🇦 Panama | Petroleum & Coal | $2,106M |
Missouri | 🇨🇦 Canada | Transportation equip. | $2,390M |
Montana | 🇨🇦 Canada | Minerals | $153M |
Nebraska | 🇲🇽 Mexico | Agricultural | $933M |
Nevada | 🇨🇠Switzerland | Metal | $1,399M |
New Hampshire | 🇩🇪 Germany | Transportation equip. | $695M |
New Jersey | 🇨🇦 Canada | Chemicals | $2,734M |
New Mexico | 🇲🇽 Mexico | Computer & Electronics | $2,014M |
New York | 🇨🇠Switzerland | Metal | $18,262M |
North Carolina | 🇨🇳 China | Chemicals | $4,312M |
North Dakota | 🇨🇦 Canada | Petroleum & Coal | $1,441M |
Ohio | 🇨🇦 Canada | Transportation equip. | $5,990M |
Oklahoma | 🇨🇦 Canada | Machinery | $418M |
Oregon | 🇨🇳 China | Computer & Electronics | $6,261M |
Pennsylvania | 🇨🇦 Canada | Chemicals | $2,280M |
Rhode Island | 🇮🇹 Italy | Waste & Scrap | $321M |
South Carolina | 🇩🇪 Germany | Transportation equip. | $3,774M |
South Dakota | 🇨🇦 Canada | Processed Foods | $297M |
Tennessee | 🇨🇦 Canada | Transportation equip. | $2,017M |
Texas | 🇲🇽 Mexico | Petroleum & Coal | $33,627M |
Utah | 🇬🇧 UK | Metal | $6,805M |
Vermont | 🇹🇼 Taiwan | Computer & Electronics | $447M |
Virginia | 🇮🇳 India | Minerals | $1,799M |
Washington | 🇨🇳 China | Agricultural | $10,553M |
West Virginia | 🇮🇳 India | Minerals | $657M |
Wisconsin | 🇨🇦 Canada | Machinery | $1,802M |
Wyoming | 🇮🇩 Indonesia | Chemicals | $200M |
When it comes to the types of exports, transportation equipment emerges as the primary source for the majority of states, with minerals and ores, chemicals, and computer and electronics following closely behind.
For instance, North Carolina ships $4.3 billion worth of chemicals to China, marking one of the longest-distance trade flows among states. Meanwhile, Florida boasts one of the most diverse export portfolios, engaging in trade with Europe, South America, and the Caribbean.
Louisiana heavily relies on the export of agricultural products to China, which contributes significantly to its total GDP. Similarly, Michigan’s transportation equipment exports to Canada constitute a noteworthy portion of the state’s GDP.
In Oregon, exports of semiconductors and other computer parts to China, driven by companies like Intel and Micron, play a crucial role in the state’s economy. Meanwhile, Utah predominantly exports primary metal manufacturing goods to the United Kingdom.
The biggest exporter in the country, Texas, sees a significant portion of its GDP attributed to exports to Mexico, further underlining the state’s economic ties with its southern neighbor.
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