1

NH’s Economy: Looking to the Future

May 10, 2012

Dennis DelayNHCPPS

Board of DirectorsSheila T. Francoeur, Chair

David Alukonis

Michael Buckley

William H. Dunlap

Eric Herr

Richard Ober

James Putnam

Stephen J. Reno

Stuart V. Smith, Jr.

Donna Sytek

Brian F. Walsh

Martin L. Gross, Chair Emeritus

John D. Crosier, Sr.,

Todd I. Selig

Kimon S. Zachos

Directors Emeritus

2

Calculated Risk has the clearest picture of the problem we face:

3

NH – Less of a decline, more recovery.

Index of Total NonFarm Employment

93.0

94.0

95.0

96.0

97.0

98.0

99.0

100.0

101.0

102.0

Jan-

07

Apr-0

7

Jul-0

7

Oct-07

Jan-

08

Apr-0

8

Jul-0

8

Oct-08

Jan-

09

Apr-0

9

Jul-0

9

Oct-09

Jan-

10

Apr-1

0

Jul-1

0

Oct-10

Jan-

11

Apr-1

1

Jul-1

1

Oct-11

Dec

200

7 =

100

US NH Manchester

New Hampshire

Manchester

United States

4

NH Recovery in business services, tourism, and durables.

Change in New Hampshire Jobs

-12000

-10000

-8000

-6000

-4000

-2000

0

2000

4000

6000

8000

Man

ufac

turin

g

Constr

uctio

n

Trade

& T

rans

porta

tion

Financ

ial A

ctivit

ies

Prof &

Bus

Ser

vices

Edu &

Hea

lth S

ervic

es

Leisu

re &

Hos

pitali

ty

Gover

nmen

t

Jun07 to Jun09Mar 10 to Mar 12

55

NH’s Great Recession Occurred in 1990’s

Monthly NH NonFarm Employment, January 1969 - December 2011

0

100

200

300

400

500

600

700

01/6

9

01/7

0

01/7

1

01/7

2

01/7

3

01/7

4

01/7

5

01/7

6

01/7

7

01/7

8

01/7

9

01/8

0

01/8

1

01/8

2

01/8

3

01/8

4

01/8

5

01/8

6

01/8

7

01/8

8

01/8

9

01/9

0

01/9

1

01/9

2

01/9

3

01/9

4

01/9

5

01/9

6

01/9

7

01/9

8

01/9

9

01/0

0

01/0

1

01/0

2

01/0

3

01/0

4

01/0

5

01/0

6

01/0

7

01/0

8

01/0

9

01/1

0

01/1

1

Thou

sand

s of

Job

s

Grey boxes represent recessionary periods

10% Job Loss

5% Job Loss

3% Job Loss

6

NH Residential Real Estate Struggles

NH Single-Family Residential Home Sales and Price (MLS)Source: NH Association of REALTORS

0

5,000

10,000

15,000

20,000

25,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Units sold Median Price

Median Home Price

Number of Units Sold

Decline from the Peak:Sales -40% from 2004Price -21% from 2005

2011 YTD thru December

7

Home Prices Return to the Long Term Trend:

NH Single-Family Residential Home Price (MLS)

Source: NH Association of REALTORS

$1

34

,74

9

$1

41

,37

2

$1

52

,50

0

$1

70

,15

8

$1

88

,08

9

$2

06

,26

6

$2

27

,80

7

$2

37

,97

6

$2

26

,35

4

$2

16

,59

8

$1

87

,95

4

$1

70

,16

4

$1

69

,78

7

$1

57

,17

4

$0

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Median Price 2000 Inflation Adjusted

Median Home Price

Inflation Adjusted Price

8

Did too many people own homes who could not afford them, at 69%?

9

Good News: New Hampshire Home Building Not as Frantic as in the 1980’s

Monthly Housing Permits in New Hampshire January 1969 to January 2012

0

5,000

10,000

15,000

20,000

25,000

01/6

9

01/7

0

01/7

1

01/7

2

01/7

3

01/7

4

01/7

5

01/7

6

01/7

7

01/7

8

01/7

9

01/8

0

01/8

1

01/8

2

01/8

3

01/8

4

01/8

5

01/8

6

01/8

7

01/8

8

01/8

9

01/9

0

01/9

1

01/9

2

01/9

3

01/9

4

01/9

5

01/9

6

01/9

7

01/9

8

01/9

9

01/0

0

01/0

1

01/0

2

01/0

3

01/0

4

01/0

5

01/0

6

01/0

7

01/0

8

01/0

9

01/1

0

01/1

1

01/1

2

Twel

ve M

onth

Ave

rage

At A

nnua

l Rat

es

Grey boxes represent recessionary periods

10

The Local Revenue Impact: A Harder Case for Workforce Housing?

Sources: NH Department of Revenue

NH Equalized Property Value and Tax Rate

0

20

40

60

80

100

120

140

160

180

200

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Bill

ion

s

$0

$5

$10

$15

$20

$25

$30

Property Value Tax Rate

Property Values (left scale)

Tax Rate (right scale)

11

Growth in the past driven by high rates of migration.

Percent Change in NH Population

8.5%

13.8%

21.5%

24.8%

20.5%

11.4%

6.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

1950 1960 1970 1980 1990 2000 2010

U.S. Census figures released in December show that the 2000s saw the slowest rate of population growth in New Hampshire in six decades. Later this year, the Census Bureau will release specific population figures for counties and communities. What will those numbers tell us about the state’s demographic patterns over the past decade? And what will they mean for the redrawing of electoral districts in the New Hampshire Legislature later this year?

Source: New Hampshire Center for Public Policy Studies, analysis of U.S. Census data

125

We are now experiencing outmigration from the state.

Source: Office of Energy and Planning, IRS

138

Understanding the past to see the Future: Here come the baby boomers ….

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Long Term Public Policy Questions (part 1)

• What set of policies ensure the ongoing development of human capital upon which NH’s economy has been built? – We have been reliant on migration for higher

education? Both the population moving into the state and foreign born population have a larger proportion of college graduates.

– We can’t continue to depend on migrants for such a significant portion of our highly educated labor force

– Relative cost of living– Quality of Life

• Infrastructure – Water– Waste Water– Roads Bridges– IT Infrastructure

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Long Term Public Policy Questions (part 2)

• Aging– Whatever it is, we are going to have to

manage it as it’s going to change our labor markets, what people buy, what they are interested in.

• Human Capital Development– How do we take advantage of the human

capital within the baby boomer generation? – University system? – Education system for the 30 somethings

• Mitigating Competitive Disadvantages– Energy Costs– Healthcare Costs

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“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”

New Hampshire Center New Hampshire Center for Public Policy Studiesfor Public Policy Studies

Want to learn more?

• Online: nhpolicy.org

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• Twitter: @nhpublicpolicy

• Our blog: policyblognh.org

• (603) 226-2500

Board of DirectorsSheila T. Francoeur, Chair

David Alukonis

Michael Buckley

William H. Dunlap

Eric Herr

Richard Ober

James Putnam

Stephen J. Reno

Stuart V. Smith, Jr.

Donna Sytek

Brian F. Walsh

Martin L. Gross, Chair Emeritus

John D. Crosier, Sr.,

Todd I. Selig

Kimon S. Zachos

Directors Emeritus