Economic Briefing: Prospects for the New Hampshire Economy

The State of NH’s Economy and Keys to its Future Performance NH House Joint Fiscal & Ways and Mean Committee Economic Briefing January 10, 2019 Brian Gottlob, PolEcon Research bgottlob@poleconresearch.com

For Much of the Recovery NH’s Private Sector Job Growth Lagged U.S. Growth - Slow Population and Labor Force Growth, and Especially Net Out-Migration Contributed

An Increase in NH’s Labor Force Has Supported Above Forecast Job Growth in New Hampshire (Along With Other Factors)

Manufacturing Job Growth in NH Has Been Especially Strong – Higher Demand Industries and Stronger Exports

NH Exports Grew Much Faster Than U.S. Exports in 2017 & 18, Helping the State’s Manufacturing Sector - A Higher Concentration of NH Exports Go to Countries With Which the U.S. Has Had Relatively Fewer Trade Frictions

Source: U.S. ITA, PolEcon calculations

Imports From China are a Small Percentage of Total Imports in all NE States but Complex Supply Chains Mean Producers in NE May Feel Greater Impacts than Suggested Here.

Source: U.S Dept. of Commerce, International Trade Association, PolEcon calculations

In the Summer of 2019 this Economic Expansion Will Become the Longest in U.S. History – But 2020 Could Bring a Hangover

The Relationship Between Private Sector Job Growth in NH and Growth in NH’s Business Tax Revenue Changed in 2018

Without Anomalous Growth in the BPT & BET Revenue Growth From Economically Sensitive Revenues (9 Sources) Would Be Modest

6 of 10 NH Counties Have Had “Below Replacement” Levels of Population Growth (More Deaths than Births) – In Migration is Key Without It Regions Will Face Shrinking Economies

Source: U.S. Census Bureau, “Components of Population Change,” PolEcon

The Good News: Net State-to-State Migration into NH Has Been Resuming……….But it is Concentrated in the Seacoast and Southern Rockingham County Region Net Domestic (State-to-State) Migration 2010-2017 Rockingham

1,917

5,204

Strafford

1,553

929

Carroll 479 843 Belknap

954 364

-112 Merrimack

708

2010-16 2016-17

-119 Coos -122 -609

Sullivan

49

Grafton -70 -696 -1,452 -7,014

-180

-8,000

-6,000

-4,000

Cheshire

249

Hillsborough -2,000

0

2,000

Source: U.S. Census Bureau, “Components of Population Change,” PolEcon

4,000

6,000

8,000

NH Had the Sixth Highest Rate of Net Domestic (State-to-State) In-Migration of Any State in the Nation. Demographic Issues are Challenging but Overblown and Largely Misunderstood

Source: U.S. Census Bureau, “American Community Survey,� PolEcon

Unlike Other States With a High Median Age (and Many With a Lower Median Age) NH is in the Middle of States on Old-Age Dependency Ratio – Migration Trends Will Help it Remain So

NH’s Low Fertility Rate is the Primary Reason for its Higher Median Age – it is Also a Sign of the State’s Success Rather than its Failure

Source: U.S. Centers for Disease Control “Natality Statistics,” PolEcon

Early and Mid-Career Individuals are a Core Characteristic of Adult InMigration to NH but the In-Migration has Been Trending a Bit Younger

NH is Not Monolithic! “Aging� in NH is Not Consistent Across Communities. Changing Patterns Over Time Say More About Where a Community or Region is Heading Than Does Median Age Median Age of Population Seabrook

9.2

37.8 2.5

Hampton Exeter

35.3

Littleton

35.2

Stratham

8.6

4.2

36.9

4.9

4.7

3.3

4.0

6.2

4.2

33.7

NH

32.8

4.3

4.9

Rochester

32.6

4.1

5.3

Concord

33.2

Nashua

32.1

Manchester

3.8

2.4

1990

2.7

3.7

32.0 2.9 1.7

Somersworth

31.5

3.4

Dover

31.6

3.9 0.9

Londonderry

31.4

3.6

Portsmouth

31.1

Newmarket

29.2

0

10

20

3.4

30

Change 90-00

2.9

7.4

Change 00-16 6.1 2.6

2.7

40

50

60

It is Not a Mystery What Attracts Younger Adults – Social, Cultural, Natural Amenities, The “Right Kind” of Rental Housing (Not Just Cheap) Near Amenities. It is Community Decisions - (Not State Policies) that Largely Determine a Community’s Ability to Attract Younger People % of Adult Pop. (Age 25+) That is 25-34 Somersworth

24.7%

Portsmouth

24.5%

Manchester

0.7%

23.6%

Dover

0.6%

23.1%

3.0%

Concord

21.6%

0.1%

Nashua

21.5%

0.2%

Newmarket

21.5%

NH

3.6%

16.0%

Rochester

0.6%

14.1%

Londonderry

5.1%

13.7%

Exeter

1.1%

12.2%

Stratham-0.2%

11.7%

-1.1% Durham

11.9%

Bedford

3.7%

11.3%

-2.3% Hampton

Littleton -5%

0.9%

0.2%

9.9% 8.5%

0%

Avg. 2007-2011 % Change 2016

5%

7.3% 10%

15%

20%

25%

30%

Housing is Key to Attracting and Keeping a Younger Demographic. To Attract Well-Educated, Skilled Millenials Quality (Not Just Cheap!) Rentals Near Amenities is Critical

A Checklist to See if a Community Can Attract Younger Demographics •

Is there a “there, there,” – or does the community have a central core (even if not large) with an aggregation of dining, shopping, entertainment, retail, and other enterprises.

•

Are there spaces and places in the core that serve as a hub of social, cultural, and civic activity, and that serve as gathering places?

•

Are there higher quality rental apartments in or close to core of the community?

•

Are residents able to walk to the amenities (social, cultural, civic, entertainment, eating etc.) that the community offers?

•

Does the community have natural and recreational areas within walking distance or a short drive?

•

Does the community have a reputation for offering a variety of quality services and at a value relative to other communities (value not necessarily the cheapest but rather more or higher quality per dollar)?

•

Can residents interact digitally with local government?

The most valuable economic resource in the 21st century is people, and more specifically brains. Skilled, well-educated people have the most economic opportunities and are the most mobile members of society. Where they locate, robust economic activity will follow.

Movers to NH Have Higher Levels of Educational Attainment and Add to the Skill Level of the State’s Workforce - Adding “Talent” is the Key to NH’s Success and Increasingly Determines the Success of Regions Within the State

The Key to Regional Growth is the Ability to Add “Talent” (Skilled Individuals With Higher Levels of Educational Attainment) at Faster Rates than Other Regions.

Communities and Regions That do so Will Capture More of NH’s Growth % of Adult Population (age 25+) With a Bachelor’s Degree or Higher Londonderry

33.4% 2.4% 6.1%

Exeter

32.0%

Newmarket

6.0%

28.2% 4.7%

Concord

9.1%

9.8%

28.1% 2.6% 6.4%

Portsmouth

15.3%

26.6%

Nashua

5.6% 3.4%

25.9%

NH

24.4% 4.3%

Dover

24.3%

Manchester

15.7%

6.8%

8.1%

10.2%

19.6% 2.7% 5.7%

Littleton

14.3%

Rochester

8.2%

1990 Chng. 90-00

1.3%

Chng. 00-16

14.1%1.1% 6.8%

Somersworth

13.6%

Seabrook

5.2%

9.3%

10.1% 4.7%0.5%

0%

10%

20%

30%

40%

50%

60%

70%