What's UP with the Massachusetts Economy?

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

-800

-700

-600

-500

-400

-300

-200

-100

0

100

200

300

07 08 09 10

A Fragile U.S.Economic Recovery…Monthly payroll employment change, excl. Census Jobs

Consistent monthly job growth of over 150K will be necessary to reduce unemployment

-2

-1

0

1

2

3

4

5

08 09 10 11

…As Federal Fiscal Stimulus Fades

Source: Moody’s Analytics

Stimulus Contribution to real GDP growth, %

Tax rebate checks

Recovery Act

Cash for Clunkers

Housing tax credit

-30

-20

-10

0

10

20

30

40

50

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

70 75 80 85 90 95 00 05

Profits Surge and Jobs Should Follow…

Sources: BLS, BEA

Profit growth,lagged 3 quarters (R)

Job growth,% change year-over year (L)

0

20

40

60

80

100

120

1790 1815 1840 1865 1890 1915 1940 1965 1990 2015

Sources: Treasury, Moody’s Analytics

The average federal debt-to-GDP ratio since WWII is 40%

Worries over Federal Debt

Federal debt-to-GDP ratio

The Economic Picture

Massachusetts Rebound

Massachusetts

The Massachusetts economy is growing faster than that of the U.S.

-0.7

4.7

3.5

2.5

-0.5

2.0

-3.5

-7.3

-0.6

-3.3

1.3

4.6

6.1

5.4

0.9

3.2

2.3

2.9

-0.7

0.6

-4.0

-6.8

-4.9

-0.7

1.6

5.0

3.7

1.7

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

2007 2008 2009 2010

Qu

art

erl

y G

row

th a

t A

nn

ua

l Ra

tes

Growth in Real Product, Massachusetts Current Economic Index vs. U.S. GDP

MA US

Source: U.S., Bureau of Economic Analysis; Massachusetts, Massachusetts Benchmarks

0.9000

0.9200

0.9400

0.9600

0.9800

1.0000

1.0200

1.0400

Economic Activity Index and Employment Index for Massachusetts and U.S. - 1990 Recession

U.S. Economic Activity Index

U.S. Employment Index

+ 2.7%

- 2.3%

- 8.0%

0%

Massachusetts Economic Activity Index

Massachusetts Employment Index

0.9400

0.9500

0.9600

0.9700

0.9800

0.9900

1.0000

1.0100

1.0200


U.S. Economic Activity Index

U.S Employment Index



+ 1.0%

- 2.0%

- 2.5%

- 5.3%

0.9300

0.9400

0.9500

0.9600

0.9700

0.9800

0.9900

1.0000

1.0100



U.S Economic Activity Index


U.S Employment Index

- 1.6%

- 3.2%

- 4.5%

- 5.5%

1.2%

6.4%

0.7% 0.7%

0.4%

1.6%

2.4%

0.8%

1.9%

1.5%

-0.4%

0.5%

-0.6%

1.0%

0.5%

-1.2%

-0.8%

1.4%1.2% 1.3%

0.9%

-1.1%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

Total Non-Farm Construction Manufacturing Trade, Transportation,

and Utilities

Information Financial Activities

Professional and Business Services

Education and Health Services

Leisure and Hospitality

Other Services Government

Percentage Change in Employment - January 2010 - September 2010 Massachusetts vs. U.S.

Massachusetts United States

However, metro areas outside of Boston are still in recession,

-6.0

-5.0

-4.0

-3.0

-2.0

-1.0

0.0

1.0

2.0

Jan-08 Jan-09 Jan-10

Gro

wth

Fro

m S

ame

Mo

nth

Pri

or Y

ear (

%)

Massachusetts and U.S. Payroll Employment Growth

MA US Springfield, NSA

Source: U.S. Bureau of Labor Statistics

The Greater Boston Housing Market

140

145

150

155

160

165

170

175

180

185

Case-Shiller Single-Family Home Price Index for Greater Boston, November 2005 - June 2010

0.8

0.85

0.9

0.95

1

1.05

Months

Greater Boston Housing Cycles: 1988-1997 vs. 2005-2010, Case-Shiller Single Family Home Price Index

1988-1997 Cycle 2005-2010 Cycle

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%Ja

n

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

Oct

Jan

Apr

Jul

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year-Over-Year Percent Change in Monthly New Privately Owned Housing Starts in the United

States, 2001-2010

6,376 5,604 5,531 5,290

6,222 6,552

4,910 4,139

2,682 2,507 3,000

660

642 709 1,067

985 991

1,180

636

376 278 300

2,527 2,683 2,318

4,763

5,506

7,564

6,242

4,997

3,471

1,929 2,200

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 (est.)

Fig 2.1 Building Permits in Greater Boston by Housing Type, 2000-2010

Units in Single-Family Structures Units in 2-4 Unit Structures Units in 5+ Unit Structures

-88.5%-85.5%

-82.9%

-75.6% -73.1%

-63.7% -62.8% -60.7% -58.9%

-100.0%

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

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Percent Change in Building Permits for Selected Metropolitan Areas, January through June, 2005

- 2010

The Foreclosure Crisis

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000Ja

nuary

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

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July

Octo

ber

January

Apri

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July

Octo

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January

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July

Octo

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January

Apri

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July

Octo

ber

January

Apri

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July

Octo

ber

January

Apri

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July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

l

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Monthly Foreclosure Petitions in Greater Boston, 2000-2010

Source: The Warren Group

0

100

200

300

400

500

600

700

800

January

Apri

l

July

Octo

ber

January

Apri

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July

Octo

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January

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Octo

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January

Apri

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July

Octo

ber

January

Apri

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July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

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July

Octo

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January

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Octo

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January

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July

Octo

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January

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July

Octo

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January

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2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Monthly Foreclosure Deeds in Greater Boston, 2000 - 2010


0

200

400

600

800

1,000

1,200

1,400

1,600

January

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

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July

Octo

ber

January

Apri

l

July

Octo

ber

January

Apri

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July

Octo

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January

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July

Octo

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January

Apri

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July

Octo

ber

January

Apri

l

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Monthly Foreclosure Auctions in Greater Boston, 2000 - 2010


3.7

4.5

3.7

6.7

4.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1-Family 2-Family 3-Family Condo Total

Ratio of Foreclosure PETITIONS 2010 vs. 2005 (January - June) in Greater Boston, by Housing Type


21.1

19.4

18.4

23.1

20.8

0.0

5.0

10.0

15.0

20.0

25.0


Ratio of Foreclosure DEEDS 2010 vs. 2005 (January -June) in Greater Boston, by Housing Type

5.6

7.3

9.3

14.1

7.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0


Ratio of Foreclosure AUCTIONS 2010 vs. 2005 (January - June) in Greater Boston, by Housing Type

Source: The Warren

The Demographic Picture

33,292 33,34731,785

29,04126,515

30,28527,014

23,551 24,518

-22,892

-39,506

-48,514

-61,980-60,053

-49,528

-35,121

-18,675

3,614

10,400

-6,159

-16,729

-32,939 -33,538

-19,243

-8,107

4,876

28,132

-80,000

-60,000

-40,000

-20,000

0

20,000

40,000

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

Net Migration to and from Massachusetts, 2000-2009

Foreign Migration Internal Migration Net Migration

New Hampshire +20.4%Vermont +17.0%Maine +13.2%Rhode Island +11.3%Massachusetts + 9.1%Connecticut + 8.0%

U.S. +14.8%

93%99% 106%

113%

135%149%

530%

0%

100%

200%

300%

400%

500%

600%

D.C

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Nevada

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Texas

Idaho

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Arizona

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Georg

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Louis

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South

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Ark

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Wis

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Monta

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Massachusett

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Connecticut

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Ohio

West

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Proportion of State's Household Growthaccounted for by those Age 55+

2007-2020

U.S.: 99%Mass: 135%

Net Increase in Households: 222,700

Under 55: -77,70055+: +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?

What's UP with the Massachusetts Economy?

Documents

Transcript of What's UP with the Massachusetts Economy?