NH Business Growth Sectors House and Senate Finance and Ways & Means Committees Dennis Delay Deputy Director, New Hampshire Center for Public Policy Studies 1/9/2007

2 Anecdotal evidence from the Fed Bank of Boston, November 29, 2006 Business contacts in the First District are fairly upbeat, with the exception of most retail respondents. Double-digit revenue increases for software and information technology services firms and also for staffing firms. Commercial real estate markets continue to strengthen. While tourism-related businesses are doing well, most contacted retailers say sales have softened. Manufacturers report that orders or sales of products related to housing have weakened. High end of the labor market continues to tighten. Energy-related cost pressures have eased but selected other input and vendor prices are rising.

3 Even Though Mfg is Large, It’s Contribution to Earnings Growth Has Lagged, Healthcare Increases Source: Bureau of Economic Analysis

4 New Hampshire Growing Faster than US or Region Since 2001 Source: Bureau of Economic Analysis

5 Fastest Growing GDP Contributors are Not (Necessarily) the Largest Growth 2001 to 2005 Private Industry NH GDP, Ranked by 2001 to 2005 Growth ChangePercent Educational services % Utilities1,2971, % Information1,4201, % Health care and social assistance3,3664,5471, % Real estate, rental, and leasing6,2368,3222, % Administrative and waste services1,0951, % Construction2,1222, % Management of companies and enterprises % Retail trade3,7234, % Accommodation and food services1,3171, % Transportation and warehousing % Wholesale trade2,9353, % Other services, except government1,0991, % Finance and insurance4,0404, % Professional and technical services2,8733, % Arts, entertainment, and recreation % Mfg Durable goods4,4435, % Mfg Nondurable goods1,7451, %

6 Real Estate Eclipses Manufacturing in Contribution to GDP Source: Bureau of Economic Analysis

7 Most Important Industries in New Hampshire 2005 Gross Domestic Product by State (millions of current dollars)New HampshireUnited States IndustryLQNumericPercentNumericPercent Total Gross Domestic Product1.0055, %12,409, % Educational services %113,0820.9% Utilities1.691,7913.3%238,9081.9% Durable goods Manufacturing1.315,0439.2%868,4387.0% Retail trade1.274,6588.5%828,6346.7% Real estate, rental, and leasing1.208, %1,562, % Health care and social assistance1.194,5478.3%864,3557.0% Accommodation and food services1.091,6403.0%337,9572.7% Wholesale trade1.083,5236.4%733,0905.9% Finance and insurance1.074,7858.7%1,011,5488.2% Construction1.052,7545.0%593,5354.8% Source: Bureau of Economic Analysis

8 General Fund Appropriations growing only slightly more quickly than the state

9 General Fund Revenue by Source FY 2005

10 Corporate Income Taxes in New England have Been Strong. Source: New England Public Policy Center

11..in part because US Corporate Profits are at Record Levels Source: Bureau of Economic Analysis

12..but the Congressional Budget Office Forecast Says Slowdown Source: Congressional Budget Office

13 The “Other Income” Portion of NH Personal Income Increasing Since 2003 (Matching Corporate Profits) Source: Bureau of Economic Analysis

14 Southern New Hampshire Accounts for Most of Rooms and Meals Sales Source: Institute for New Hampshire Studies

15..but Tourism is Most Important to the White Mountains Source: Institute for New Hampshire Studies

16 New Hampshire affordability better than the 1980’s. Sources: Census Bureau and Bureau of Economic Analysis

17 Real Estate Overvaluation is Coastal Source: National City Bank

18 Northern New England Scores Well

19 More Information? –State Budget –Demographic Trends (What is NH?) –Corrections –Health Care Finance