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.
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.
Charted: U.S. Egg Prices More Than Double in 2022
This chart shows the increase in the national average price of a dozen Grade A eggs in the U.S. in 2022.
Charted: U.S. Egg Prices Double in 2022
Eggs are a staple food for many countries around the world, and the U.S. is no exception. Americans eat between 250‒280 eggs a year on average.
Eggs are also easy to cook, protein-dense and supply many daily vitamins needed for healthy living, making them a popular meal or ingredient. So when egg prices rise, people notice.
MetalytIQ charted the rapid rise of egg prices in the U.S. during 2022, using data from the U.S. Bureau of Labor and Statistics (BLS).
Over the course of 12 months, the national average price for a dozen large Grade A eggs more than doubled, to $4.25 in December from $1.93 in January.
|Egg Prices Per Month (2022)||Price per dozen|
The biggest culprit has been an avian flu outbreak that resulted in 43 million chickens culled to prevent the spread of the disease.
This led to a severe shortfall in egg supply. Egg inventories in December had fallen by one-third compared to January. Combined with increasing demand during the holiday season, prices skyrocketed and empty shelves became apparent in some states.
This is not the first time avian flu has disrupted the industry.. In 2015, a similar outbreak pushed egg prices up 40% in nine months, reaching a high of $2.97 per dozen eggs in September 2015.
Will Egg Prices Drop in 2023?
Avian flu isn’t the only storm the egg industry has been facing in 2022.
In the near-term, egg prices are expected to remain high. Containing the avian flu outbreak will remain the biggest factor in determining the prices, but as suppliers increase production, prices may cool off a little in 2023.
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