1. New Hampshire Economic Outlook: What is the NH Advantage? Ross Gittell James R Carter Professor Whittemore School of Business and Economics University of New Hampshire

2. Over the last decade NH ranks 11 th of 50 states and 1 st in Northeast in employment growth. NH has the 6 th highest per capita income in the US (2003)

3. NH’s Overall Economic Resiliency: Total employment change and ranks US, NH & Leading High Tech States, Colorado and Mass. STNAME01--04Rank01--02Rank02--04Rank03--04Rank Total Employment US 1.0%-0.4%1.4%1.6% COCOLORADO-0.6%44-0.9%440.4%411.4%22 MAMASSACHUSETTS-3.2%50-1.5%50-1.7%490.1%47 NHNEW HAMPSHIRE1.8%20-0.7%412.5%131.9%15

4. High Tech..1990s boom followed by bust and forecast of moderate growth. NH (in green) had greatest percent decline 2001-02..but “recovering” better than Mass

5. Concentration in manufacturing within high technology in NH compared to US average contributed to pronounced decline

6. High Technology Resiliency: NH and other High Tech and New England States

7. New Hampshire’s Strong Economic Recovery Latest Data NH …Jan04-Jan05 Total employment grew 2.9% compared to US average of 1.6% (NH ranked 8 th highest)…other fast growing states are NV, AZ, FL Services employment grew 5% compared to US average of 1.7% (ranked 8 th ) High Tech Employment in NH …June 03 to June 04  7.8% growth, NH ranked 4 highest  big turnaround from “tech bust” decline of more than 1/3 rd and ranked 50 th..  NH reliant economy..shift within high tech to growth sectors from commodity manufacturing… growth in engineering and life sciences R&D, engineering services and testing labs and cable and other program distribution

8. New Hampshire has several inter-related strengths to sustain a high per capita income and resilient economy

9. High positive correlation between high tech employment concentration and per capita income across the 50 US states.. NH in top tier

10. Educational attainment has a strong positive correlation with per capita income. The state’s economy benefits from an educational advantage which will have to be sustained to keep the economy strong

11. Also very strong correlation between education and income in NH Counties and bordering Counties Educational advantage is the key to economic advantage

12. New Hampshire Leading Industries and Clusters Industries

15. Summary of leading industry clusters in the State and 10 counties

16. Leading Industry Clusters in the 10 NH counties. Listing all clusters that were leading in at least one county. Top 3 – contractors, L&H and Health Care are leading in most every county, FIRE only in one. … the lower the # in the cell the stronger the cluster in the county

17. The county economies and leading industries across the state ySullivan and Coos have the fewest leading industry clusters in common with other counties. These counties are not connected to or benefiting significantly from the leading industry clusters elsewhere in the state. ySpecialty trade contractors is the most pervasive leading industry cluster with a presence in nine out of the ten counties. This is a product of the recent strong housing and construction markets in the state. yProfessional, scientific and technical services is a core leading industry cluster with significant presence in four counties. Rockingham, Hillsborough, Strafford and Carroll. yInformation industries is also a core leading industry. Leading in the technology centers of the state –the counties of Hillsborough, Rockingham and Grafton yThe health care industry is a dominate leading industry in central and northern NH. yHillsborough has 3 unique industry clusters not shared with other counties, including finance and computer and component manufacturing.

18. Economic Forecast: US, New Hampshire and New England

19. US Economy in “sweet spot” …growth steady but not too fast yPositives for NH –Employment growth in US sustained and picking up pace, w/o large increases in wages –Inflation in check –Business investment increasing –US Corporate profits remain strong..yet, there are some mixed views on future of US corporate profits with global competition

20. US Economy Risks Remaining y Continued Manufacturing decline –e.g., in NH … Celestica’s announced closing of Salem facility and Nashua Corp layoffs recently..but worst appears to be over for manufacturing in NH y Energy price rise – still gas prices would have to hit nearly $3.00 per gallon to reach all time 1980s real high yHousing Market and Bubble – but interest rates remain low and NH now part of Boston real estate market and relatively “under-priced” yTrade deficit, dollar weakening, and fiscal crisis if foreigners decide not to finance US debt – but this will not have impact short-term as much as long term and benefit of weakening dollar is increased NH exports..

21. New England and NH Economic Outlook Summary yNew England region in recovery yBut recovery has been slow compared to previous recoveries and has lagged US recovery mainly because of weak Mass economy yForecasted growth rates well below late 1990s levels yNH, once again, expected to have highest growth in employment in the region.. Most resilient economy in region yIn NH..Professional & Business Services, Leisure & Hospitality and Health & Education Services expected to grow at highest rates

22. New England Forecast.. moderated GSP (yellow) and Employment (green) and GSP growth compared to late 1990s… Employment ½ of 1990s (2% down to 1.1%)..GSP growth down from 4.2 to 3.4 annually

23. Gross Product (Overall Output): Region will catch up and then surpass US overall growth rate..but not by as much as in the late 1990s. Growth in US will decline slightly 2004 to 2005

24. GSP Forecast..NH expected to have overall economic growth above the US average over the forecast period… Maine and Vermont with lowest overall growth in output

25. Forecast: Regional Employment recovery from early 2000s recession …New England region (in green) has lagged behind the US

26. Total Employment Forecast..only NH (in green) expected to grow above US (red) rate..Mass expected to continue to grow below US average and lowest in region

27. New Hampshire in all “super sectors” is expected to grow employment at rate higher than regional and US average. In NH the strongest sectors are forecasted to be Prof. & Business Services followed by Leisure & Hospitality

28. NH Summary: Average Annual Growth 1993-98; 98-03; 03-08. Recovery from early 2000s recession, moderate growth compared to mid-1990s

29. Unemployment Forecast..NH expected to have lowest unemployment, Mass one of the highest …NH unemployment Dec 2004, 3.3, compared to US, 5.4 and NH Dec 2003 of 4 percent

30. New England and NH Looking Forward yKey Issues –Recovery in high tech? Can New England & NH compete effectively in retaining well paying high tech jobs and investment and shifting high tech to new growth sectors. Need to maintain leadership in education and R&D and quality of life. –Demographics. Even with slow growing employment, unemployment low. Slow population growth, migration out of the young and educated, aging population. –Rising Interest Rates. What will be the impact of rising interest rates on housing prices (bubble?) and consumer spending?