How far does a dollar go?
In the local community, quite a bit.
In economics-speak, the “Local Multiplier Effect,” or LME, refers to how many times a dollar is recirculated in the community.
Economists differ on what that number is, but generally, the estimates are in the single digits.
President Barack Obama’s economic team says the multiplier is 1.6 for its recent stimulus package, meaning the nearly $1 trillion stimulus infusion is exected to generate about $1.6 million through the economy.
Other studies and economists have said the multiplier effect is four or five.
Armed with this information, the Daily Journal, along with several advertisers, are hoping you spend “$20 on the 20th” to provide a stimulus shot into the local economy.
If the approximately 17,000 households who read today’s edition of the Daily Journal were to spend $20 on Wednesday, the 20th, that would mean an initial $340,000 would be pumped immediately into the economy.
Instead of ordering online or buying from some big box retailer, why not – for just this one day – spend your money with a locally owned merchant?
Spending $20 at a locally owned retailer would go quite farther in the local economy – three times as much as spending with a non-locally owned business, some studies indicate. Using a multiplier effect of 4.5, that initial $340,000 would generate another $1.53 million into the local economy.
Rose McCoy, owner of Creative Cakes and Supplies in Tupelo, said she’s participating in the “$20 on the 20th” campaign because it would keep dollars in Lee County.
“This also is a way to show I do appreciate my customers and I feel like this is kind of giving back,” she said. “Nothing against the national retailers, but this is money that will be used here and not somewhere out of state.”
McCoy is offering a small sheet cake with a traditional design for $20, including tax. Normally, the cost would be $25.
At Knight’s Family Restaurant in Tupelo, owner Don Knight is selling two one-piece catfish dinners, which include drinks and sides, for $20. That’s a savings of nearly $5 as well.
Knight said he wanted to generate sales, of course, but like McCoy, he wanted to keep money in local hands.
More than two dozen Lee County businesses are participating, offering a range of $20 specials.
Restaurants, clothing stores, beauty and makeup stores, shoe stores, nursery and garden stores and specialty boutiques and shops have all joined the “$20 on 20” campaign.
NEMS Daily Journal