The Party Started: How Long Can it Last For New Hampshires Economy? - PowerPoint PPT Presentation

The Party Started: How Long Can it Last For New Hampshire’s Economy? Joint Economic Briefing New Hampshire House and Senate Finance and Ways and Means Committees January 9, 2017 Brian Gottlob PolEcon Research bgottlob@poleconresearch.com

Outline • NH’s Recent and Current Economic Performance in Context • Key Factors Influencing the Outlook for NH’s Economy • Implications for State Policy • Implications for NH Revenues

After Lagging for Much of the Recovery, Private Sector Job Growth in NH Has Accelerated Over the Past 2 Years Yr.-Over-Yr. Private Sector Job Growth 3.0% NH MA U.S. 2.5% 2.0% 1.5% 3 Mos. Moving Average 1.0% 0.5% 2012 2013 2014 2015 2016 2017

Help Wanted Ads Have Declined During the Same Time – More and Faster Hiring Reduced Repeat Ads? 32 7.0% 30 5.0% 3 Mos. Moving Average 28 3.0% 26 1.0% 24 22 -1.0% 20 -3.0% Help Wanted Ads in NH (000s) 18 -5.0% Year-Over-Year Private Sector Job 16 Growth in NH (%) 14 -7.0% 09 10 11 12 13 14 15 16 17

After Years of Stagnation NH’s Labor Force Growth Supported Greater Job Growth Annual Rate of Labor Force Growth 6% 5% NH Labor Force Growth 4% U.S. Labor Force Growth 3% 2% 1% 0% 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 -1% -2%

Markets Work! As Hiring Has Accelerated So Too Have Private Sector Wages $26.5 3.0% Avg. Hourly Wages in Private Sector $26.0 (3 Mos Moving Avg.) 2.5% Yr.-Over-Yr. % Growth Private Emp. $25.5 In NH $25.0 2.0% $24.5 1.5% $24.0 $23.5 1.0% R = .80 2 = .66 $23.0 R 0.5% $22.5 $22.0 0.0% 12 13 14 15 16 17

Average Wages Also Track NH’s Unemployment Rate $27.0 -2.00 $26.0 -3.00 $25.0 -4.00 $24.0 -5.00 $23.0 -6.00 $22.0 Avg. Hourly Wages in Private Sector (3 Mos Moving Avg.) -7.00 $21.0 NH Unemployment Rate (Inverted) $20.0 -8.00 08 09 10 11 12 13 14 15 16 17

10.00 (2.00) 0.00 2.00 4.00 6.00 8.00 North Dakota Wyoming % Growth in Personal Income 2015 to QIII 2016 NH is Second Only to Utah in Personal Income Growth Alaska* Oklahoma West Virginia Louisiana New Mexico Montana South Dakota Iowa Texas Kansas Minnesota Nebraska V T Vermont Pennsylvania Alabama Kentucky RI Rhode Island Since 2015 Delaware Mississippi Wisconsin Arkansas Idaho Ohio CT Connecticut Illinois New Jersey Missouri Colorado Maryland Virginia Arizona Michigan Tennessee New York Indiana North Carolina Hawaii* ME Maine MA Massachusetts Florida Georgia Washington South Carolina California Nevada Oregon NH New Hampshire Utah

All is Not Perfect - Labor Utilization is Still Not Back to Pre-Recession Levels Alternative Measures of Labor Underutiliation 14.0 12.0 10.0 4.9 4.9 4.5 4.8 4.7 8.0 4.5 1.2 0.9 3.2 1.1 3.8 6.0 1.1 1.0 2.3 3.2 2.1 1.0 2.4 0.8 4.0 0.6 0.8 0.6 0.8 6.4 0.7 6.0 5.6 5.4 5.2 4.2 2.0 3.8 3.6 3.4 3.4 2.9 2.8 0.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3- Part-Time (Not by Choice) 2016 Discouraged & Marginally Attached Basic Unemp Rate

NH Should Continue to Have Above U.S. Average Employment Growth Job Growth Forecast 3.0% U.S. Historical Forecast New Hampshire 2.5% 2.1% 2.1% 1.9% 1.9% 2.0% 1.8% 1.7% 1.6% 1.5% 1.5% 1.5% 1.1% 1.0% 0.5% 0.0% 2014 2015 2016 Est 2017 2018

Key Factors Affecting NH’s Growth

10% 15% 20% 25% 30% 35% 40% 45% 50% 0% 5% NH’s Brain GAIN: All States are Seeing Increases in Ed. Attainment West Virginia Mississippi Arkansas Louisiana Kentucky 2005 % Chng 2005-15 Nevada Alabama (Don’t Forget About Demand Side Policies!) Oklahoma Indiana But Very Different Rates of Job Growth Tennessee Idaho Wyoming New Mexico % Pop. Age 25+ With a BA Degree or Higher Ohio South Carolina Iowa South Dakota Arizona Michigan Missouri Texas Wisconsin Florida North Dakota North Carolina Pennsylvania Alaska Georgia ME Maine Nebraska Montana Delaware Hawaii Kansas Utah Oregon California RI Rhode Island Illinois Washington Minnesota New York NH New Hampshire VT Vermont Virginia New Jersey CT Connecticut Maryland Colorado MA Massachusetts

We ARE Adding Educated Labor But We are Adding More Than is Being Employed by NH Businesses (Demand Side Matters! And Maybe Associate’s and Certificate Degrees are a Better Indicator) 50% % of NH Pop Age 25+ With at BA Degree or Higher 45% % of NH Jobs Held by Someone Age 25+ With a BA Degree or Higher 40% 35.7% 35% 31.8% 31.6% 30.9% 30% 25% 20% 15% 10% 2005 2015

10.0% 12.0% 14.0% -2.0% More of the Nation’s Population Moves South and West – NH and MA 0.0% 2.0% 4.0% 6.0% 8.0% New England Has Been on the Losing End of Demographic Trends as West Virginia Illinois V T Have Strongest Growth (Albeit from Different Sources) Vermont Connecticut CT ME Maine RI Rhode Island Michigan Pennsylvania Ohio Mississippi New Mexico NH Population Growth 2010-2016 NH Wisconsin New Jersey Missouri Alabama New York Kansas Kentucky Indiana Arkansas Iowa Louisiana Wyoming MA Massachusetts Minnesota Maryland Nebraska Alaska Oklahoma Tennessee Hawaii Virginia California Montana Delaware South Dakota North Georgia Oregon South Carolina Idaho Washington Arizona Nevada Florida Colorado Utah Texas North Dakota

All of New England Lost Population Due to Net Out-Migration to Other States but Gained From Net In-Migration From Other Countries Between 2010 and 2016 Population Growth From Migration 300,000 Domestic 250,000 International 200,000 150,000 236,088 100,000 100,910 50,000 9,715 12,587 25,406 5,196 0 (2,783) (9,272) (28,565) (1,962) (72,605) (50,000) (135,684) CT ME MA NH RI VT (100,000) (150,000) (200,000)

Net State-to-State Migration to NH is Resuming and is the Most Important Factor in Determining How Much We Grow Net Migration to NH 14,000 12,132 12,000 Net State-to-State Migration 10,000 9,170 Net International Migration 8,000 6,472 6,000 4,600 4,000 3,117 2,854 2,170 2,187 2,000 0 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 (773) (938) -2,000 (1,570) (2,206) (2,337) (2,389) (2,473) (2,602) -4,000

The Seacoast Has Accounted for Almost all of NH’s Net State-to- State Migration Since the End of the Recession (Providing Clues to What it Takes to Attract Individuals) Net Domestic Migration 2010-2015 3,389 Rockingham County Strafford County 1,157 Belknap County 556 Carroll County 104 Merrimack County (93) (667) Sullivan County Grafton County (887) (1,038) Coos County (1,360) Cheshire County Hillsborough County (6,685) -8,000 -6,000 -4,000 -2,000 0 2,000 4,000

Migration Into NH is Weighted Toward Younger Demographics, Two-Thirds of Movers Into The State are Under Age 35, With Ages 25-34 is the Largest Group Age Distribution of Out-of-State Movers to NH (2011-2015) 55 + 14.4% 45 to 54 9.9% 35 to 44 11.7% 25 to 34 23.0% 20 to 24 13.5% 18 to 19 12.7% Under 18 14.7% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

Economically There is No Difference Between Someone in NH Who Graduated From a NH College or From a College Somewhere Else (Ed. Attainment of Individuals Age 25+ Who Moved to NH Between 2011 and 2015) 18.4% Grad. Or Prof. 23.8% 12.8% 29.2% Bachelor's 36.3% 21.6% 25.9% Some College or 18.0% Associate's Degree 28.8% 21.1% HS Grad. 13.2% 29.1% Moved From Another State 5.3% Moved From Another Country Less Than HS Grad. 8.7% 7.7% Non-Migrants (Same State) 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Universities are a Critical Resource for Growth But Popular Public Policies Supporting Them May Not Maximize the Impact on a State’s Economy Results by Bound et al.: The link between attending college in a state and remaining in that state following graduation is so minor that state policymakers “have only a modest capacity” to influence their college-graduate retention rate through higher education investment. Results by Groen.: The probability of a student remaining in a state 10 years after graduation is increased by approximately 25% if she/he attends an in-state school. The percentage increase drops to 11% 20 years after graduation.

A Key Demand Side Policy is Tax Rates. Business Taxes as a Pct. of Private Sector Gross State Product is a Better Relative Measure of Than Burden Than is the Tax Rate – They are High in NH Corporate Taxes as a % of Private Sector Gross State Product 1.4% 1.2% NH MA 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

Electricity Prices in NH are Especially Hard on Manufacturers. Industrial Customers Pay About 80% More for Electricity in NH Than the U.S. Avg.. Avg. NH Electricity Prices as a % of U.S. Average Prices 215% 195% 175% 155% 135% 115% Industrial Commercial Residential 95% 75% 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: U.S. Energy Information Agency, PolEcon