Transcript MMA Presentation

What’s UP with the
Massachusetts Economy?
MAPC Fall Council Meeting
Crowne Plaza Hotel
Natick, Massachusetts
October 26, 2010
Barry Bluestone
The Economic Picture
The U.S. Context
A Fragile U.S.Economic Recovery…
Monthly payroll employment change, excl. Census Jobs
300
200
100
0
-100
-200
-300
-400
-500
-600
-700
-800
Consistent monthly job
growth of over 150K will
be necessary to reduce
unemployment
07
08
09
10
…As Federal Fiscal Stimulus Fades
Stimulus Contribution to real GDP growth, %
5
4
3
2
Cash for
Clunkers
Recovery
Act
Tax rebate
checks
Housing tax
credit
1
0
-1
-2
08
09
Source: Moody’s Analytics
10
11
Profits Surge and Jobs Should Follow…
6
5
4
3
2
1
0
-1
-2
-3
-4
-5
Profit growth,
lagged 3 quarters (R)
50
40
30
20
10
0
-10
Job growth,
% change year-over year
(L)
70
75
Sources: BLS, BEA
80
85
-20
-30
90
95
00
05
Worries over Federal Debt
Federal debt-to-GDP ratio
120
100
The average federal debt-toGDP ratio since WWII is
40%
80
60
40
20
0
1790 1815 1840 1865 1890 1915 1940 1965 1990 2015
Sources: Treasury, Moody’s Analytics
The Economic Picture
Massachusetts Rebound
Massachusetts
The Massachusetts economy is growing
faster than that of the U.S.
Growth in Real Product, Massachusetts Current Economic
Index vs. U.S. GDP
Source: U.S., Bureau of Economic Analysis; Massachusetts, Massachusetts Benchmarks
8.0
Quarterly Growth at Annual Rates
6.1
6.0
4.0
3.2
5.4
5.0
4.6
4.7
3.7
3.5
2.3
2.9
2.5
2.0
2.0
1.3
0.9
1.7
1.6
0.6
0.0
-0.7
-0.5
-0.7
-0.6
-0.7
-2.0
-4.0
-3.3
-3.5
-4.0
-4.9
-6.0
-6.8
-7.3
-8.0
2007
2008
MA
2009
US
2010
1.0400
Economic Activity Index and Employment Index for Massachusetts and U.S. - 1990
Recession
+ 2.7%
1.0200
1.0000
U.S. Economic Activity Index
0%
0.9800
U.S. Employment Index
- 2.3%
0.9600
Massachusetts Economic Activity Index
0.9400
Massachusetts Employment Index
0.9200
- 8.0%
0.9000
Economic Activity Index and Employment Index for Massachusetts and U.S. - 2001
Recession
1.0200
+ 1.0%
1.0100
1.0000
U.S. Economic Activity Index
0.9900
U.S Employment Index
0.9800
0.9700
- 2.0%
Massachusetts Economic Activity Index
- 2.5%
0.9600
0.9500
- 5.3%
0.9400
Massachusetts Employment Index
Economic Activity Index and Employment Index for Massachusetts and U.S. - 2007
Recession
1.0100
1.0000
0.9900
- 1.6%
0.9800
0.9700
Massachusetts Economic Activity Index
Massachusetts Employment Index
0.9600
- 3.2%
0.9500
- 4.5%
U.S Economic Activity Index
0.9400
0.9300
- 5.5%
U.S Employment Index
Percentage Change in Employment - January 2010 - September 2010
Massachusetts vs. U.S.
7.0%
6.4%
6.0%
Massachusetts
United States
5.0%
4.0%
3.0%
2.4%
1.9%
2.0%
1.6%
1.5%
1.4%
1.2%
1.0%
1.0%
0.7%
1.3%
0.9%
0.8%
0.7%
0.5%
0.5%
1.2%
0.4%
0.0%
Total Non-Farm
Construction
-0.6%
Manufacturing
Trade,
Transportation,
and Utilities
Information
Professional and Education and
Business Services Health Services
Leisure and
Hospitality
Other Services
Government
-0.4%
-0.8%
-1.0%
-1.2%
-2.0%
Financial
Activities
-1.1%
However, metro areas outside of Boston
are still in recession,
Massachusetts and U.S. Payroll Employment Growth
Source: U.S. Bureau of Labor Statistics
Growth From Same Month Prior Year (%)
2.0
1.0
0.0
-1.0
-2.0
-3.0
-4.0
-5.0
-6.0
Jan-08
Jan-09
MA
Jan-10
US
Springfield, NSA
The Greater Boston Housing
Market
Case-Shiller Single-Family Home Price Index for
Greater Boston, November 2005 - June 2010
185
180
175
170
165
160
155
150
145
140
Greater Boston Housing Cycles: 1988-1997 vs. 20052010, Case-Shiller Single Family Home Price Index
1.05
1
0.95
0.9
0.85
0.8
Months
1988-1997 Cycle
2005-2010 Cycle
Year-Over-Year Percent Change in Monthly New
Privately Owned Housing Starts in the United States,
2001-2010
60.0%
40.0%
20.0%
0.0%
-20.0%
-40.0%
2001
2002
2003
2004
2005
2006
2007
2008
2009
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
Oct
Jul
Apr
Jan
-60.0%
2010
Fig 2.1 Building Permits in Greater Boston by Housing Type, 2000-2010
16,000
14,000
12,000
7,564
10,000
8,000
5,506
2,527
2,683
2,318
642
709
4,997
991
985
660
6,000
6,242
4,763
1,067
1,180
636
4,000
6,376
5,604
5,531
5,290
6,222
2,200
1,929
6,552
4,910
2,000
3,471
300
376
278
2,682
2,507
3,000
2008
2009
2010 (est.)
4,139
2000
2001
2002
2003
Units in Single-Family Structures
2004
2005
Units in 2-4 Unit Structures
2006
2007
Units in 5+ Unit Structures
-90.0%
-100.0%
-88.5%
-85.5%
-80.0%
-82.9%
-75.6%
-30.0%
-40.0%
-50.0%
-60.0%
-70.0%
-73.1%
Boston-Cambridge-Quincy, MA-NH
-20.0%
Raleigh-Cary, NC
-10.0%
Austin-Round Rock, TX
0.0%
Seattle-Tacoma-Bellevue, WA
New York-Northern New JerseyLong Island, NY-NJ-PA
Minneapolis-St. Paul-Bloomington,
MN-WI
Las Vegas-Paradise, NV
Phoenix-Mesa-Scottsdale, AZ
Miami-Fort Lauderdale-Miami
Beach, FL
Percent Change in Building Permits for Selected
Metropolitan Areas, January through June, 2005 2010
-63.7%
-62.8%
-60.7%
-58.9%
The Foreclosure Crisis
2000
2001
Source: The Warren Group
2002
2003
2004
2005
2006
2007
2008
2009
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
2,000
Monthly Foreclosure Petitions in Greater Boston,
2000-2010
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
2010
2000
2001
Source: The Warren Group
2002
2003
2004
2005
2006
2007
2008
2009
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
Monthly Foreclosure Deeds in Greater Boston,
2000 - 2010
800
700
600
500
400
300
200
100
0
2010
2000
2001
Source: The Warren Group
2002
2003
2004
2005
2006
2007
2008
2009
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
October
July
April
January
Monthly Foreclosure Auctions in Greater Boston,
2000 - 2010
1,600
1,400
1,200
1,000
800
600
400
200
0
2010
Ratio of Foreclosure PETITIONS 2010 vs. 2005
(January - June) in Greater Boston, by Housing Type
8.0
7.0
6.7
6.0
5.0
4.5
4.2
4.0
3.7
3.7
3.0
2.0
1.0
0.0
1-Family
Source: The Warren Group
2-Family
3-Family
Condo
Total
Ratio of Foreclosure DEEDS 2010 vs. 2005 (January June) in Greater Boston, by Housing Type
25.0
23.1
21.1
20.8
19.4
20.0
18.4
15.0
10.0
5.0
0.0
1-Family
2-Family
3-Family
Condo
Total
Ratio of Foreclosure AUCTIONS 2010 vs. 2005
(January - June) in Greater Boston, by Housing Type
16.0
14.1
14.0
12.0
10.0
9.3
8.0
6.0
7.3
7.1
5.6
4.0
2.0
0.0
1-Family
Source: The Warren
2-Family
3-Family
Condo
Total
The Demographic Picture
Net Migration to and from Massachusetts, 2000-2009
40,000
33,347
33,292
31,785
30,285
29,041
28,132
27,014
26,515
24,518
23,551
20,000
10,400
4,876
3,614
0
-6,159
-20,000
-8,107
-16,729
-32,939
-40,000
-18,675
-19,243
-22,892
-33,538
-35,121
-39,506
-48,514
-49,528
-60,000
-61,980
-60,053
-80,000
2000-2001
2001-2002
2002-2003
2003-2004
Foreign Migration
2004-2005
Internal Migration
2005-2006
Net Migration
2006-2007
2007-2008
2008-2009
New Hampshire
Vermont
Maine
Rhode Island
Massachusetts
Connecticut
+20.4%
+17.0%
+13.2%
+11.3%
+ 9.1%
+ 8.0%
U.S.
+14.8%
500%
400%
100%
0%
D.C.
Nevada
Utah
Texas
Idaho
Oregon
Arizona
North Carolina
Washington
Maryland
California
Florida
Georgia
Minnesota
Virginia
New Hampshire
U.S. Total
New Jersey
Tennessee
Delaware
Louisiana
Vermont
South Carolina
Alaska
Michigan
Rhode Island
Arkansas
Wisconsin
Mississippi
Montana
Colorado
Maine
Missouri
Massachusetts
Kentucky
Indiana
New Mexico
Hawaii
Connecticut
Kansas
Pennsylvania
Illinois
Alabama
Oklahoma
Wyoming
New York
Ohio
West Virginia
Iowa
South Dakota
Nebraska
North Dakota
600%
Proportion of State's Household Growth
accounted for by those Age 55+
2007-2020
135%
99%
93%
106%
530%
U.S.: 99%
Mass: 135%
300%
200%
149%
113%
Net Increase in Households: 222,700
Under 55: -77,700
55+:
+300,371
Impact on State and Local
Government
 Will the aging of the population have a major
adverse effect on state and local revenue?
 Will the aging of the population lead to an
increased need for state and local public
services
 Will the aging of the public employee workforce
create a drain on state and local budgets?
The “Third Civil War”
 19th Century Civil War
 North-South: Slavery
 20th Century Civil War
 North-South: Where MFG takes place
 21st Century Civil War
 Which regions, states, and cities and towns will
be able to retain and attract young working
families to fill in the labor force and revenue
gap?
 What factors are most important in winning the
3rd Civil War?