The New Hampshire Economy

1
The New Hampshire Economy

• Oct 19, 2006
• Ross Gittell, UNH

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Overview of Presentation

• The NH Economy
• The fastest growing economy in New England region
• A leader in employment and population growth
• Transformation in the economy over the last
  quarter century
• In-migration of college educated baby boomers
• Per capita income growth
• High technology industry concentration and growth
• Current Positioning Broad-based, resilient
  economy
• The Economic Outlook (for the state and region)
• Looking Forward Issues of Concern
• Rising inequality in the region and state
• Demographic trends which will strongly influence
  the states economic future

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NH Economic Highlights

• Rising per capita income improving in rank among
  50 statesfrom 25th to 6th in last quarter
  century
• Lowest poverty rate in the nation
• Leading New England region and the Northeast in
  population and employment growth over the last
  quarter century and again in the 2000s
• Consistently one of the ten lowest unemployment
  rates in the nation.
• Strong high technology industry positioning
  ranked 9th in employment concentration in high
  technology industries
• The last quarter century economic change related
  to
• Rising productivity with increased concentration
  in higher value added activities, such as high
  technology products and services, new product
  development, professional and business services
  and education and health services
• Rise in educational attainment of adult
  population
• In-migration of baby boomers
• and the inter-relationship among these three

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New Hampshires Economic Growth Tied to Strong
Up-Cycles and Long-Term Resilience

• Overall (over business cycles) NH performance
  better than most other states in the US and tops
  in the region
• NHs economic strength has been and continues to
  be its ability to grow significantly faster than
  average during periods of growth across most
  sectors of the economy and to have high growth in
  a core base of industries and businesses during
  the growth periods
• This is happening again..
• Latest AeA Cyber-states report ranked NH first
  among 50 states in percent increase in high
  technology employment in 2004 with growth of 6.8
  percent compared to 1 percent nationally

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NH is a leading state

• But in a slow growth region
• And in a good news and bad news US economy
• Expected to have slow(ed) overall growth
• And with a lot of vulnerabilities in national
  economy
• Housing market (bubble?)
• Uncertainty in energy sector
• Rising deficits and interest rates

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New England Economic Partnership (NEEP) Fall
(Preliminary) 2006 Forecast Gross State Product
average annual growth. All states in the region
growing slower than US average.
7
GSP Average annual growth 2000-2010. Forecast
is for the region to grow at rate less than the
US average
8
Total Employment Forecasts average annual growth
only NH (in red) above 1 percent per year in the
region.. But NH below US average
9
NE forecasted growth in all employment
super-sectors expected to be below US average.
Health Education and Prof. Business services
growing fastest.. But below US average
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Growth in the region expected to be greater than
1st half of decade ..but remain about 1/2 of last
half of 1990s in most sectors
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Forecast growth, US, NE, NH (red). NH in Info,
Prof Bus services and Finance growing above US
average
12
New Hampshire has several inter-related strengths
to sustain a high per capita income and resilient
economy
13
High positive correlation between high tech
employment concentration and per capita income
across the 50 US states.. NH in top tier
14
Educational attainment has a strong positive
correlation with per capita income and high tech
employment. The states economy benefits from an
educational advantage which will have to be
sustained to keep the economy strong
15
10 NH Counties Correlation Higher Education and
Income
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Income distribution in New Hampshire and the
Region

• From low inequality to rising disparity over the
  last business cycle, 1990-2004...

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The ten states with the lowest HH income
inequality in 2004 and their change in rank
1989-2004. NH low disparity, 1989-04
experienced greatest increased disparity of low
ranking
18
Why low disparity in NH? In the New England
region NH has highest percentages of total income
in income quintiles 12, well above US average.
All top quintiles now account for about 50
percent of total income in each of the states.
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Rise in Disparity in the Region 1989-2004 3 of
the 6 New England states CT,VT and Mass --
ranked among top 5 in disparity increase. All
New England states, including NH, have
experienced increase in disparity above the
median. Table The five states with the
greatest increase in income disparity and the
least. Also data on New Hampshire and other New
England states.
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From 1989 to 2004 New England went from lowest
disparity to median disparity among US Census
regions. This was mostly a result of the 1990s
pronounced (in New England compared to US
average) income take-off at the top and hollowing
out of the middle class. There has been some
retrenchment in inequity in the region since 1999
after the technology economy bust but sharp
disparity rise persists.
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Some of the reasons for the sharp increase in
disparity in NH and New England and in Metro
areas

• Technology based economies and the take off at
  the top of the income distribution.
• Hollowing out of the middle class with loss of
  manufacturing jobs and global outsourcing.

22
New England and other regions. Take off in the
top income quintile and hollowing out of the
middle income quintiles, 1989-2004. Take off at
the top and decline in the 4th quintile most
pronounced in New England.
Range .05 Pts
23
By state. NH and other New England states. The
take off at the top and hollowing out of the
middle, 1989-2004, most pronounced in CT, VT and
Mass.
Range.09 Pts
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Demographics related to economic future

• -- Aging population
• -- Slow growth in labor force and the population
• -- Low, but rising foreign born percentages

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Steep decline in entry level workforce population
in NH and the region over the last 15 years
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NH has high percentage of baby boomers
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And about the US average percentage of older
adults
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Middle aged cohort grew significantly in NH
1990-2004
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Aging of the population significantly more
pronounced in NH and Northern New England than US
average
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Forecasted NH population growth by age
cohort2005-2015. Significant growth in 50-70
year old cohort predicted
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Foreign Born Population

• Low percentage of population
• but increasing in NH

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NH and NNE has very low current percent of
population foreign born
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Foreign born population is increasing in NH and
NNE. (Very) Recent phenomenon
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2005 Leading Countries of Foreign Born Population

• New Hampshire
• Canada
• India
• Vietnam
• Maine
• Canada
• Germany
• Philippines
• Vermont
• Canada
• Germany
• India
• Massachusetts
• Brazil
• China
• Portugal
• United States
• Mexico
• China

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The NH Economy and Advantage Looking Forward

• Short Term Concerns
• -- Will there be a housing bust/bubble in the
  nation and NH? And what will be the impact?
• Longer Term
• -- Can New England NH Compete effectively in
  retaining well paying high tech jobs and
  investment and in effectively shifting high
  technology expertise to new growth sectors.
• -- Can the region and state maintain leadership
  in education and RD and quality of life???
• -- Demographics. How will the region and NH
  address decline in younger cohort and increasing
  older population? Can the region and state
  attract increasing numbers of foreign born
  skilled and unskilled workers? What will be the
  impact on public priorities and policies on
  demographic trends? Who will pay for health care
  and support of older population? Will seniors
  support education, and quality of life?