1. The Economy and Its Impact on Education September 2006 Russ Thibeault Applied Economic Research

2. US Economy: So Far…..So Good

3. Economic Growth is in the Comfort Zone: Not Too Fast or Slow

4. Unemployment Has Dropped Sharply

5. We’re Not Making Much Stuff

6. But We’re Buying Lots: Rising Consumer Spending (Retail Sales) are Driving Economic Growth

7. Inflation is Back, Raising Concerns at the Fed, But Lower Energy Prices Will Help

8. Consumer Confidence is OK, But Just OK

9. Leading Indicators Have Been Falling

10. Savings Rate is Negative

11. Trade Deficit Remains a Ticking Time Bomb

12. Budget Deficit Borrows Future Prosperity But Some Modest Improvement is Emerging

13. In a Nutshell Economy is in good shape now Economy is in good shape now Solid growth Solid growth Low unemployment Low unemployment Interest rates are reasonable Interest rates are reasonable But inflation on the rise: falling energy prices may help But inflation on the rise: falling energy prices may help We favor consumption over investment We favor consumption over investment Negative savings rate Negative savings rate Large trade deficit Large trade deficit Large federal budget deficit Large federal budget deficit Transitioning to slower growth Cooler housing market will soften consumer spending Transitioning to slower growth Cooler housing market will soften consumer spending

14. The Outlook Through December 2007 Slower economic growth (1.5-3.0% GDP), but not a recession Slower economic growth (1.5-3.0% GDP), but not a recession Moderate Rise in inflation and interest rates Moderate Rise in inflation and interest rates No major storm clouds No major storm clouds What to Watch: Energy Costs and Inflation What to Watch: Energy Costs and Inflation BUT: Serious problems over the mid-long- term BUT: Serious problems over the mid-long- term Trade deficit Trade deficit Budget deficit Budget deficit Low savings rate Low savings rate

15. NH Economy: Humming Along

16. Record Job Level

17. But: Erosion of Manufacturing Job Base Resurfaces

18. Unemployment is Low

19. Personal Income tops $50 Billion

20. Income Growth Returns to Long Term Trend

21. NH Economic Prospects Moderating growth nationally will have an impact on NH job growth Moderating growth nationally will have an impact on NH job growth Big issues: Big issues: Attracting quality, bread-winner jobs Attracting quality, bread-winner jobs Affordable housing Affordable housing Out migration of young workers Out migration of young workers Overall, a softening but not a 90s style recession Overall, a softening but not a 90s style recession

22. Real Estate Markets: Soft Landing (So Far)

23. US Housing Markets are Cooling Off

24. National Housing Starts at Three Year Low

25. Housing Construction Rises, But Not to Alarming Levels: Recent Data Shows a Decline in 2006

26. Fewer Units Selling This Year

27. Inventory Doubles as High Prices Attract Listings

28. Effective Inventory Has Risen, Approaching Dangerous 12 month Level

29. NHHFA Purchase Price Data Shows Some Value Loss 2005-Spring of 2006

30. Prices Outstrip Income

31. Consumers Mortgage Poor?

32. Of Special Note

33. Declining Enrollment is Now Obvious

34. Smaller Entry Level Classes Portend Lower Future Total Enrollment

35. Home Schooling is Leveling Off

36. New Units: Not Many Kids

37. The Wal Mart Economy: NH Occupational Growth 2004-2014