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THOMAS M. MENINO, Mayor JOHN F. PALMIERI, Director Alvaro Lima, Director of Research BOSTON REDEVELOPMENT AUTHORITY RESEARCH DIVISION DOMINIC MODICAMORE.

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Presentation on theme: "THOMAS M. MENINO, Mayor JOHN F. PALMIERI, Director Alvaro Lima, Director of Research BOSTON REDEVELOPMENT AUTHORITY RESEARCH DIVISION DOMINIC MODICAMORE."— Presentation transcript:

1 THOMAS M. MENINO, Mayor JOHN F. PALMIERI, Director Alvaro Lima, Director of Research BOSTON REDEVELOPMENT AUTHORITY RESEARCH DIVISION DOMINIC MODICAMORE Senior Research Associate/Economist – BRA November 19, 2008 The Boston & Massachusetts Finance Sector

2 PRESENTATION OUTLINE Overview of Boston and Massachusetts Employment Trends Employment Trends in the Finance and Insurance Sector Boston Largest Finance and Insurance Sector Employers –Massachusetts Mutual Fund Companies –Global Financial crisis and the impact on Massachusetts –Projected Finance and Insurance Sector Job Losses –Economic and Fiscal Impact of Finance Sector Job Losses

3 Overview of Employment Trends – City of Boston Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

4 Overview of Employment Trends - Massachusetts Source: The Bureau of Economic Analysis (BEA).

5 Overview of Employment Trends – City of Boston City of Boston Employment by Industry Sector, 2001 and 2007 Percent of Industry (NAICS)20012007ChangeTotal 2001Total 2007 Agriculture/Fishing/Mining (11,21) 119 115-40.02%0.0% Utilities (22) 2,703 2,139-5640.4%0.3% Construction (23) 19,641 17,436-2,2052.9%2.6% Manufacturing (31-33) 18,244 10,450-7,7942.7%1.6% Wholesale Trade (42) 10,963 10,251-7121.6%1.5% Retail Trade (excludes food service) (44-45) 31,242 31,9747334.6%4.7% Transportation and Warehousing (48-49) 24,453 19,695-4,7583.6%2.9% Information (51) 22,264 16,850-5,4143.3%2.5% Finance and Insurance (52) 85,522 81,275-4,24712.7%12.1% Real Estate and Rental and Leasing (53) 18,784 21,3922,6082.8%3.2% Professional, Scientific, and Technical Services (54) 75,585 74,933-65211.2%11.1% Management of Companies and Enterprises (55) 10,260 7,294-2,9661.5%1.1% Admin. & Support and Waste Mgmt and Remediation Ser. (56) 39,482 45,3505,8695.9%6.7% Educational Services (61) 44,388 50,6116,2246.6%7.5% Health Care and Social Assistance (62) 97,977 116,74818,77114.5%17.3% Arts, Entertainment, and Recreation (71) 12,158 13,9641,8061.8%2.1% Accommodation and Food Services (72) 43,499 46,8033,3046.5%6.9% Other Services (except public administration) (81) 26,189 29,0902,9013.9%4.3% Government 89,979 77,553-12,42613.4%11.5% Total 673,451 673,924473 Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

6 Overview of Employment Trends - Massachusetts Massachusetts Employment by Industry Sector, 2001 and 2007 Percent of Industry Sector20012007ChangeTotal 2001Total 2007 Agriculture/Fishing/Mining 16,004 16,2922880.4% Utilities 12,388 10,444-1,9440.3%0.2% Construction 218,776 243,54324,7675.3%5.7% Manufacturing 401,126 307,618-93,5089.7%7.2% Wholesale Trade 151,796 151,9461503.7%3.6% Retail Trade (excludes food service) 416,841 415,626-1,21510.1%9.8% Transportation and Warehousing 101,171 98,800-2,3712.5%2.3% Information 123,109 103,006-20,1033.0%2.4% Finance and Insurance 234,116 240,1696,0535.7%5.6% Real Estate and Rental and Leasing 119,848 164,38744,5392.9%3.9% Professional, Scientific, and Technical Services 372,367 401,38929,0229.1%9.4% Management of Companies and Enterprises 70,397 62,219-8,1781.7%1.5% Admin. & Support and Waste Mgmt and Remediation Ser. 211,313 229,75718,4445.1%5.4% Educational Services 188,017 220,00231,9854.6%5.2% Health Care and Social Assistance 485,521 548,98863,46711.8%12.9% Arts, Entertainment, and Recreation 85,429 100,97115,5422.1%2.4% Accommodation and Food Services 251,812 270,53718,7256.1%6.4% Other Services (except public administration)* 196,381 223,49327,1124.8%5.2% Government 458,110 446,851-11,25911.1%10.5% Total 4,114,522 4,257,385142,863 Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

7 Employment Trends in Finance & Insurance - Boston Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

8 Employment Trends in Finance & Insurance - Massachusetts Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

9 Employment Trends in Finance & Insurance - Boston Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

10 Employment Trends in Finance & Insurance - Massachusetts Source: Boston Redevelopment Authority, using data from the Massachusetts Executive Office of Labor and Workforce Development and the Bureau of Economic Analysis.

11 Employment Trends 2008 - Massachusetts Source: The Massachusetts Executive Office of Labor and Workforce Development

12 Finance & Insurance Employment Trends 2008 - Massachusetts Source: The Massachusetts Executive Office of Labor and Workforce Development

13 Finance & Insurance Employment Trends 2008 - Massachusetts Source: The Massachusetts Executive Office of Labor and Workforce Development

14 Boston Finance & Insurance Sector Employers Boston's Largest Finance and Insurance Sector Employers 2004 BostonMassachusettsWorld-Wide Employment Fidelity Investments 8,000 11,500 45,500 John Hancock 3,232 4,164 Mass. Financial Services Co. 3,100 Scudder Investments 3,000 American Employers Insurance Co 2,933 Blue Cross Blue Shield of Mass 2,600 3,878 Putnam Investments 2,521 2,542 State Street Bank & Trust Co 2,500 13,900 28,900 Boston Safe Deposit and Tr Co 2,034 Liberty Mutual 1,870 3,719 Investors Financial Svcs Corp 1,679 New England Financial 1,500 Boston Company Inc 1,300 Brown Brothers Harriman & Co. 971 Federal Reserve Bank of Boston 950 Goodwin Proctor LLP 925 Linsco/Private Ledger Corp. 825 Bank of America 822 8,000 Pioneer Investment Management USA 800 Evergreen Investments (Wachovia) 750 Chase Global Funds Services Co 599 Citizen's Bank (40 branches and 1 office) 567 3,750 Manulife Financial 550 Source: Boston Redevelopment Authority and Boston Business Journal

15 Massachusetts Mutual Funds Massachusetts Mutual Funds Companies 2006 Assets Under Business NameManagementCity Location Fidelity Investments $ 1,195,646,000,000Boston Columbia Management Group Inc. $ 237,403,000,000Boston Wellington Management Co. $ 167,118,000,000Boston State Street Global Advisors $ 140,308,000,000Boston Putnam Investments $ 103,391,500,000Boston MFS Investment Management $ 88,893,000,000Boston GMO $ 68,761,000,000Boston John Hancock Funds $ 43,686,300,000Boston Eaton Vance Corp. $ 38,400,900,000Boston Pioneer Investment Management USA Inc. $ 38,037,700,000Boston MassMutual Life Insurance Co. $ 24,785,600,000Springfield Loomis Sayles & Co. LP $ 13,600,000,000Boston NATIXIS Global Associates $ 12,427,000,000Boston Capital Growth Management Advisors $ 4,704,800,000Boston Investors Bank & Trust Co. $ 3,544,500,000Boston Northeast Investors Trust $ 1,546,000,000Boston Century Capital Management Inc. $ 1,184,200,000Boston Quantitative Advisors Inc. $ 1,113,600,000Lincoln Standish Mellon Asset Management $ 907,300,000Boston Acadian Asset Management Inc. $ 863,400,000Boston Polaris Capital Management Inc. $ 601,500,000Boston Robeco Boston Partners $ 578,700,000Boston Weston Financial/New Century Portfolios $ 441,700,000Wellesley Bogle Investment Management LP $ 359,300,000Newton Boston Trust Investment Management $ 301,700,000Boston TOTAL ASSETS UNDER MANAGEMENT $ 2,188,604,700,000 Source: Boston Business Journal

16 Global Financial Crisis and Its Impact on Massachusetts The collapsing stock market, declining real estate prices, and record amount of foreclosures have caused a global financial crisis. The Stock Market has declined 40% from its all-time high in October 2007. Home prices are down roughly 20% in Massachusetts since the peak value in 2005 and in some metro areas in the Southwest prices are down 50%. Nationwide, foreclosures were up 75% in 2007 over 2006 and have continued to increase in 2008. Mutual Funds and Wealth Management have been the hardest hit sectors in Massachusetts and Boston Fidelity, Columbia Management, and Putnam, three of Boston’s largest mutual fund companies, saw assets fall roughly 11% each during the month of September alone. Bank of America announced that it will move most of its wealth management operations from Boston to New York City following its takeover of Merrill Lynch. Boston became Bank of America’s wealth management headquarters after BofA’s takeover of Fleet in 2004.

17 Projected Finance & Insurance Sector Job Losses Projected Finance and Insurance Sector Job Losses A study by Moody’s Economy.com projected that Massachusetts would lose 7,200 finance sector jobs between now and the end of 2009. It was projected that the majority of those jobs be gained back in 2010 as the economy rebounds. Announced Layoffs with Major Impacts on Massachusetts Fidelity Investments – 3,000 jobs (1,300 in 4Q 08 and 1,700 in 1Q 09) First Marblehead Corp. – 500 jobs Bank of America – Potentially several hundred as wealth management headquarters moves to NYC.

18 Economic and Fiscal Impact Economic and Fiscal Impact of Projected Finance Sector Job Losses in Massachusetts (Fixed 2008 $'s) 200920102011 Employment-21,230-11,050-534 GRP-$3,295,937,000-$1,740,551,000-$47,581,020 Real Disposable Income-$1,305,094,000-$675,149,900-$53,838,320 Output-$5,411,926,000-$2,845,156,000-$46,763,740 Massachusetts Income Tax Revenue-$76,187,000-$44,344,500-$5,743,400 Massachusetts Sales Tax Revenue-$14,907,443-$8,326,723-$1,076,683


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