to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire s future. Stuck in Neutral, Demographics, and A Sustainable Future? New Hampshire Joint Engineering Societies October 6, 2011 Dennis Delay Economist NHCPPS
New Hampshire Center for Public Policy Studies 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 Want to learn more? Online: nhpolicy.org Facebook: facebook.com/nhpolicy Twitter: @nhpublicpolicy Our blog: policyblognh.org (603) 226-2500 to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire s future. 2
Financial Markets Becalmed for Now 6 "TED" Rate Difference Between 3 month LIBOR and 3 month US T-Bill 10/10/08 5 4 3 Lehman Failure 2 1 LTCM Y2K Tech Bust SubPrime Shock 0 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
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 Dec 2007 =100 102.0 101.0 100.0 99.0 98.0 97.0 96.0 95.0 94.0 93.0 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 US NH Manchester New Hampshire United States Apr-10 Jul-10 Oct-10 Jan-11 Manchester Apr-11 Jul-11
NH s Great Recession was in the early 1990 s Monthly NH NonFarm Employment, January 1969 - July 2011 Grey boxes represent recessionary periods 700 600 5% Job Loss 500 3% Job Loss 400 300 200 100 0 01/69 01/70 01/71 01/72 01/73 01/74 01/75 01/76 01/77 01/78 01/79 01/80 01/81 01/82 01/83 01/84 01/85 01/86 01/87 01/88 01/89 01/90 01/91 01/92 01/93 01/94 01/95 01/96 01/97 01/98 01/99 01/00 01/01 01/02 01/03 01/04 01/05 01/06 01/07 01/08 01/09 01/10 01/11 Thousands of Jobs 10% Job Loss
Smart Manufacturing and High Tech Still Leads the Economy! $7,000,000 New Hampshire Total Compensation Paid by Selected Industries (Thousands of Dollars) Manufacturing + High Tech $6,000,000 $5,000,000 Healthcare $4,000,000 $3,000,000 Retail Trade $2,000,000 Finance $1,000,000 Construction Education $- Real Estate 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Sources: Bureau of Economic Analysis
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 25,000 20,000 Decline from the Peak: Sales -40% from 2004 Price -21% from 2005 Median Home Price $300,000 $250,000 15,000 Number of Units Sold $200,000 $150,000 10,000 $100,000 5,000 $50,000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 YTD thru July Units sold Median Price $0
Home Prices Return to the Long Term Trend: NH Single-Family Residential Home Price (MLS) Source: NH Association of REALTORS $300,000 $250,000 Median Home Price $200,000 $150,000 $100,000 $50,000 $134,749 $141,372 $152,500 $170,158 $188,089 $206,266 $227,807 $237,976 $169,787 $170,164 $187,954 $216,598 $226,354 Inflation Adjusted Price $157,174 $0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Median Price 2000 Inflation Adjusted
New Hampshire Home Building Not as Frantic as in the 1980 s Monthly Housing Permits in New Hampshire January 1969 to July 2011 Grey boxes represent recessionary periods 25,000 20,000 15,000 10,000 5,000 0 01/01/69 01/01/70 01/01/71 01/01/72 01/01/73 01/01/74 01/01/75 01/01/76 01/01/77 01/01/78 01/01/79 01/01/80 01/01/81 01/01/82 01/01/83 01/01/84 01/01/85 01/01/86 01/01/87 01/01/88 01/01/89 01/01/90 01/01/91 01/01/92 01/01/93 01/01/94 01/01/95 01/01/96 01/01/97 01/01/98 01/01/99 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 Twelve Month Average At Annual Rates
NH Foreclosures Have Peaked? 600 NH Monthly Foreclosure Deeds 500 400 Actual Trend 300 200 100 0 Jan-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 Source: NH Housing Finance Authority May-10 Sep-10 Jan-11 May-11 Sep-11
The Local Revenue Impact: Wherefore Workforce Housing? NH Equalized Property Value and Tax Rate Property Value Tax Rate 200 180 160 Tax Rate (right scale) $30 $25 140 $20 Billions 120 100 80 60 40 20 0 1978 1979 1980 Property Values (left scale) 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 Sources: NH Department of Revenue 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $15 $10 $5 $0
Demographics
We re still growing but slower Percent Change in NH Population 30.0% 25.0% 20.0% 21.5% 24.8% 20.5% 15.0% 13.8% 11.4% 10.0% 8.5% 6.9% 5.0% 0.0% 1950 1960 1970 1980 1990 2000 2010 Source: New Hampshire Center for Public Policy Studies, analysis of U.S. Census data
Understanding the past to see the Future: Here come the baby boomers. 8
Are we old? Not yet, but getting there 14
15
Seniors spend more on health care, less on pensions and insurance 20.0% 15.0% Percent Change in NH Per Capita Consumer Spending due to Age Structure Change 14.3% 10.0% 9.4% 6.3% 5.0% 0.0% 2.5% 0.1% 3.6% -5.0% -10.0% -15.0% -5.3% -11.8% Health Care Entertainment Insur &Pension Education Change 1990-2005 Change 2005-2020 Simulation using the Consumer Expenditure Survey 23
Health Care Market Impacts? 23
Smart Manufacturing and High Tech Still Leads, but Health Care Gaining! $7,000,000 New Hampshire Total Compensation Paid by Selected Industries (Thousands of Dollars) Manufacturing + High Tech $6,000,000 $5,000,000 Healthcare $4,000,000 $3,000,000 Retail Trade $2,000,000 Finance $1,000,000 Construction Education $- Real Estate 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Sources: Bureau of Economic Analysis
Sustainable Consumption
The Success of the Climate Change Strategy Source: Stratfor.com
The Success of the Climate Change Strategy Greenhouse Gas Emissions (Metric tons of CO2 Equivalent) per Dollar of US GDP 800 760 720 680 640 600 560 520 480 440 400 Source: US DOE 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? US Energy Expenditures as a Share of GDP 16 14 12 10 8 6 4 2 0 Source: DOE 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? Share of New Hampshire GDP Energy, Healthcare and K-12 Schools 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 1970 1972 1974 1976 1978 Source: NHCPPS 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 2010 New 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 England Categories Rank Rank Favorable Tax Climate (state and local burden on income, 2008) 1 1 Standard of Living (by inverse of poverty rate 2009) 1 1 Most Livable State (CQ Press, 2010) 1 1 Safest State (Lowest crime rank, 2009) 1 1 Child and Family Well Being (Annie E. Casey Foundation, 2010) 1 1 Education Adults with High School Degree or better (2009 ACS) 4 1 Healthiest State (CQ Press, 2010) 5 2 Per Capita Income (2009) 10 3 Education Adults with College Degree or better (2009 ACS) 9 4