What’s Ahead for Maine in Next 20 Years? John Davulis, Chief Economist Central Maine Power Company...

What’s Ahead for Maine in Next 20 Years?

John Davulis, Chief EconomistCentral Maine Power Company

Long Range Planning SeminarMaine Dept. of Transportation

August 8, 2005

2

Long-range planning has to be different

• Short-term forecasts are dominated by events – oil prices

– base closings

– housing bubble

• In the long run, the structure of the system will change– aging population

– climate change

– technological advances

3

Credibility is important

• There is another way you can tell you’re a Republican. You have faith in free enterprise, faith in the resourcefulness of the American people, and faith in the U.S. economy. To those critics who are so pessimistic about our economy, I say “Don’t be economic girlie men!”

– Gov. Arnold Schwarzenegger, Republican Natl. Convention, August 31, 2004

4

When, where & how big?

• Unfortunately economic models aren’t very good at telling us about the distant future

• As Patrick Henry aptly observed in 1775: “I know of no way of judging

the future but by the past.”

• Today’s economic models are offer – a reasonable extrapolation of

the past that is tempered by likely structural changes in the local and the national economy

– nothing is predetermined

5

Overview of Presentation

• Global Insight’s economic forecast for Maine & its counties– no BRAC impacts are

incorporated

– slow employment growth• continuing loss of

manufacturing jobs

– slower population growth

– aging population

6

Growth in Total Nonfarm Employment (000s), June 2004 to 2005

June Percent June Job Percent2004 of US 2005p Growth of US Rank

California......... 14,479.0 11.04% 14,752.5 273.5 14.07% 1Florida........... 7,503.2 5.72% 7,731.3 228.1 11.73% 2Texas.............. 9,474.9 7.23% 9,590.4 115.5 5.94% 3Arizona............ 2,365.6 1.80% 2,463.2 97.6 5.02% 4New York........... 8,450.5 6.45% 8,525.1 74.6 3.84% 5

Massachusetts...... 3,182.0 2.43% 3,205.8 23.8 1.22% 25Connecticut........ 1,648.6 1.26% 1,670.8 22.2 1.14% 27New Hampshire...... 626.1 0.48% 637.9 11.8 0.61% 37Rhode Island....... 488.4 0.37% 495.0 6.6 0.34% 44

Vermont............ 302.7 0.23% 308.5 5.8 0.30% 47North Dakota....... 337.5 0.26% 342.6 5.1 0.26% 48Maine.............. 614.0 0.47% 618.4 4.4 0.23% 49South Carolina..... 1,827.7 1.39% 1,814.0 -13.7 -0.70% 50Michigan........... 4,387.6 3.35% 4,373.9 -13.7 -0.70% 51

Total U.S………… 131,110.3 100.00% 133,054.5 1,944.2 100.00%

7

Economic/Demographic Outlook for Maine, 2005-2025

0.6%0.7%

-0.8%

0.2%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Total Employment Nonmfg. Empl. Manuf. Empl. Population

1990-2005 2005-2025

8

Annual % Growth in Total Employment, 2005-2025

0.6%

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2%

Piscataquis

Sagadahoc

Oxford

Franklin

Kennebec

Aroostook

Washington

Penobscot

Waldo

Androscoggin

Maine

York

Knox

Somerset

Cumberland

Hancock

Lincoln

9

Percent of Employment in High Tech Industries, 2004

Mass.10.7%

U.S.7.4%

Maine3.1%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Mic

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n

Was

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ton

DC

Con

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Mar

ylan

d

Cal

iforn

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Was

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ton

Col

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Illin

ois

New

Ham

pshi

re

Tota

l U.S

.

Min

neso

ta

New

Mex

ico

New

Yor

k

Flo

rida

Kan

sas

Nor

th C

arol

ina

Uta

h

Ver

mon

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Neb

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Okl

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Ark

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Loui

sian

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Mis

siss

ippi

Nor

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Ala

ska

Wyo

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10

Manufacturing Employment (thous.)

40

50

60

70

80

90

100

1990 1995 2000 2005 2010 2015 2020 2025

11

Annual % Growth in Manufacturing Employment, 2005-2025

-0.8%

-2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0%

Franklin

Kennebec

Aroostook

Penobscot

Piscataquis

Sagadahoc

Oxford

Washington

Androscoggin

Knox

Waldo

Maine

Cumberland

York

Hancock

Somerset

Lincoln

12

Population by Age (% of Total)

10%

15%

20%

25%

30%

35%

40%

1990 1995 2000 2005 2010 2015 2020 2025

Aged 65 and Older

Aged 0 to 24

13

Annual % Growth in Population, 2005-2025

0.2%

-0.1% 0.0% 0.1% 0.2% 0.3% 0.4% 0.5% 0.6%

Piscataquis

Kennebec

Sagadahoc

Franklin

Penobscot

Oxford

Aroostook

Washington

Androscoggin

Maine

York

Knox

Cumberland

Waldo

Somerset

Hancock

Lincoln

14

Annual % Growth in Nonmanufacturing Employment, 2005-2025

0.7%

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2%

Piscataquis

Kennebec

Franklin

Oxford

Aroostook

Penobscot

Washington

Sagadahoc

Waldo

Maine

York

Androscoggin

Knox

Cumberland

Somerset

Hancock

Lincoln

15

Two Possible Futures

The Blonde in the Thunderbird -- we can try to revel in our past “glory”

The Edukators -- we can rearrange the furniture

16

Bruce Mau: Massive Change

17

My Grandfather’s Axe

• This is my grandfather’s axe. My father changed the blade, and I have changed the handle.

Old “Polish” Saying

The Economist

June 23, 2005

18

Is This My Grandfather’s Maine?

• What original or early material is essential to the integrity and significance of Maine -- two decades ahead?

• What design elements do we want to safeguard and maintain?