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Stuck in Neutral, Demographics, and
A Sustainable Future?
New Hampshire Joint Engineering Societies
October 6, 2011
Dennis Delay Economist NHCPPS
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”
2
“…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.”
Board of Directors Todd I. Selig, Chair David Alukonis Michael Buckley William H. Dunlap Sheila T. Francoeur Stephen Reno Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh Kimon S. Zachos Martin L. Gross, Chair Emeritus John D. Crosier, Sr., Emeritus
New Hampshire Center for Public Policy Studies
Want to learn more? • Online: nhpolicy.org • Facebook: facebook.com/nhpolicy • Twitter: @nhpublicpolicy • Our blog: policyblognh.org • (603) 226-2500
Financial Markets Becalmed for Now
"TED" RateDifference Between 3 month LIBOR and 3 month US T-Bill
0
1
2
3
4
5
6
Jan-
94
Jan-
95
Jan-
96
Jan-
97
Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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Jan-
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LTCM Y2KTech Bust
SubPrime Shock
Lehman Failure
10/10/08
Calculated Risk has the clearest picture of the problem we face:
Source: Chart from Fed Bank of Boston
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-0
7
Apr-07
Jul-0
7
Oct-07
Jan-0
8
Apr-08
Jul-0
8
Oct-08
Jan-0
9
Apr-09
Jul-0
9
Oct-09
Jan-1
0
Apr-10
Jul-1
0
Oct-10
Jan-1
1
Apr-11
Jul-1
1
Dec
200
7 =1
00
US NH Manchester
New Hampshire
Manchester
United States
NH’s Great Recession was in the early 1990’s
Monthly NH NonFarm Employment, January 1969 - July 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
Th
ou
san
ds
of
Job
s
Grey boxes represent recessionary periods
10% Job Loss
5% Job Loss
3% Job Loss
Smart Manufacturing and High Tech Still Leads the Economy!
Sources: Bureau of Economic Analysis
New Hampshire Total Compensation Paid by Selected Industries(Thousands of Dollars)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Manufacturing + High Tech
Healthcare
Retail Trade
Finance
Construction
Education
Real Estate
Anecdotal evidence from the Fed Bank of Boston, September 7, 2011
Business contacts in New England continue to report mixed results.
Some manufacturers cite slowing demand while others continue to enjoy strong sales, retail activity is mostly flat, tourism is up, staffing and software and IT services firms note continued growth, and real estate markets remain sluggish.
Respondents say input cost pressures have eased somewhat since the last report.
Firms are doing little hiring. Contacts in all sectors note that the outlook is increasingly
uncertain.
Residential Real Estate Continues to Languish
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 July
Home Prices Return to the Long Term Trend:
NH Single-Family Residential Home Price (MLS)
Source: NH Association of REALTORS
$134,749
$141,372
$152,500
$170,158
$188,089
$206,266
$227,807
$237,976
$226,354
$216,598
$187,954
$170,164
$169,787
$157,174
$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
New Hampshire Home Building Not as Frantic as in the 1980’s
Monthly Housing Permits in New Hampshire January 1969 to July 2011
0
5,000
10,000
15,000
20,000
25,000
01/0
1/69
01/0
1/70
01/0
1/71
01/0
1/72
01/0
1/73
01/0
1/74
01/0
1/75
01/0
1/76
01/0
1/77
01/0
1/78
01/0
1/79
01/0
1/80
01/0
1/81
01/0
1/82
01/0
1/83
01/0
1/84
01/0
1/85
01/0
1/86
01/0
1/87
01/0
1/88
01/0
1/89
01/0
1/90
01/0
1/91
01/0
1/92
01/0
1/93
01/0
1/94
01/0
1/95
01/0
1/96
01/0
1/97
01/0
1/98
01/0
1/99
1/1/
2000
1/1/
2001
1/1/
2002
1/1/
2003
1/1/
2004
1/1/
2005
1/1/
2006
1/1/
2007
1/1/
2008
1/1/
2009
1/1/
2010
1/1/
2011
Twel
ve M
onth
Ave
rage
At A
nnua
l Rat
es
Grey boxes represent recessionary periods
NH Foreclosures Have Peaked?
NH Monthly Foreclosure Deeds
0
100
200
300
400
500
600Ja
n-05
May
-05
Sep
-05
Jan-
06
May
-06
Sep
-06
Jan-
07
May
-07
Sep
-07
Jan-
08
May
-08
Sep
-08
Jan-
09
May
-09
Sep
-09
Jan-
10
May
-10
Sep
-10
Jan-
11
May
-11
Sep
-11
Source: NH Housing Finance Authority
Actual Trend
The Local Revenue Impact: Wherefore 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
ions
$0
$5
$10
$15
$20
$25
$30
Property Value Tax Rate
Property Values (left scale)
Tax Rate (right scale)
Demographics
We’re still growing – but slower
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
Source: New Hampshire Center for Public Policy Studies, analysis of U.S. Census data
8
Understanding the past to see the Future: Here come the baby boomers ….
14
Are we old? Not yet, but getting there …
15
23
Seniors spend more on health care, less on pensions and insurance
Percent Change in NH Per Capita Consumer Spending due to Age Structure Change
9.4%
2.5% 3.6%6.3%
14.3%
0.1%
-5.3%
-11.8%-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Health Care Entertainment Insur &Pension Education
Change 1990-2005 Change 2005-2020Simulation using the Consumer Expenditure Survey
23
Health Care Market Impacts?
Smart Manufacturing and High Tech Still Leads, but Health Care Gaining!
Sources: Bureau of Economic Analysis
New Hampshire Total Compensation Paid by Selected Industries(Thousands of Dollars)
$-
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
$7,000,000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Manufacturing + High Tech
Healthcare
Retail Trade
Finance
Construction
Education
Real Estate
Sustainable Consumption
The Success of the Climate Change Strategy
Source: Stratfor.com
The Success of the Climate Change Strategy
Source: US DOE
Greenhouse Gas Emissions (Metric tons of CO2 Equivalent)per Dollar of US GDP
400440480520560600640680720760800
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
A new strategy Sustainable Consumption:
“The use of goods and services that satisfy basic needs and improve quality of life while minimizing the use of irreplaceable natural resources and the byproducts of toxic materials, waste and pollution.“ Sierra Club
Sustainable Consumption is more than conservation
Development of a personal ethic that has subscribers using as little energy and as few products as possible to achieve their desired standard of living. Changing people's attitudes toward what
has "value" and what does not. View technological developments in terms
of whether they are safe in the long run.
Key elements of Sustainable Consumption:
Taxing consumption. Taking a life-cycle view of a product's
costs. Increasing individual consumers' attention
to these issues. “Choice Editor” role by government and/or
business
Sustainable Consumption seeks to change values
Reduces the value of a good to a particular individual, and increases the value one places on that good's wider social implications. Sustainable consumption asks people to
place the community ahead of the individual.
Sustainable Consumption new views of technology
Problems industrialized societies face are caused by the unintended consequences of solutions to the timeless problems of food, heat and shelter. Consumer products that improve our
quality of life actually have a negative impact on health -- and therefore on quality of life.
Sustainable Consumption compact florescent bulb
Decreases energy use, but contains mercury. False choice in substituting one set of
problems for another. Like nuclear power (obvious). Solar power uses toxic chemicals Wind power alters landscape, bird kills.
Sustainable Consumption In Practice
Intelligent Community Vehicle System for shared hybrid and electric cars. Regional Greenhouse Gas Initiative Micro-generation. Impact of the sustainable consumption
movement is likely to be one-sided -- a continual press for conservation.
Could price have something to do with it?
Source: DOE
US Energy Expenditures as a Share of GDP
0
2
4
6
8
10
12
14
16
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
Are we worrying about the right things?
Source: NHCPPS
Share of New Hampshire GDPEnergy, Healthcare and K-12 Schools
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
Healthcare Energy School Expenditure as % of GDP
Final Thoughts on a Sustainable Future:
Neither of the two extreme principles—do nothing until we are absolutely sure it’s safe; do nothing until we are absolutely sure the alternative is dangerous—makes economic sense, or any other kind. Weigh the costs, the benefits, and the
probabilities as best all three are known, and don’t be obsessed with either extreme tail of the distribution.
New Hampshire Scores Well
New Hampshire's Economic Scoreboard for 2010New Hampshire's ranking among the 50 states and New England.(Rank of '1' is best; for example 1 is lowest tax rate, highest income, etc.)
National New EnglandCategories Rank RankFavorable Tax Climate (state and local burden on income, 2008) 1 1Standard of Living (by inverse of poverty rate 2009) 1 1Most Livable State (CQ Press, 2010) 1 1Safest State (Lowest crime rank, 2009) 1 1Child and Family Well Being (Annie E. Casey Foundation, 2010) 1 1Education – Adults with High School Degree or better (2009 ACS) 4 1Healthiest State (CQ Press, 2010) 5 2Per Capita Income (2009) 10 3Education – Adults with College Degree or better (2009 ACS) 9 4
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