ABSTRACT
In determining long-term credit quality and an issuer's ability to repay its debt, economic factors usually play a major role. Although the economy is probably the least controllable of the four main credit factors, it is critical to Moody's analysis of general obligation credit quality because the economic base is ultimately what generates the resources to repay municipal debt. Moody analyzes economic data received at regular intervals from the federal, state, and local governments to assess current conditions and to aid in predicting future performance. Current and historical labor force and employment data indicate economic performance over long- and near-term periods and provide people with a measure of stability or cyclicality. Unemployment rates are perhaps the most current measure of an area's economic health. Equally important are unemployment trends, which may demonstrate a municipality's ability to withstand changes in national or regional economic fortunes. These measures are most useful when compared with similar information for neighboring communities, state, and nation.
