1. “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” Kicking Into a Higher Gear Exeter Area Chamber of Commerce Wednesday, January 28, 2015 Board of Directors James Putnam, Chair David Alukonis Eric Herr Dianne Mercier Catherine A. Provencher Todd I. Selig Michael Whitney Daniel Wolf Martin L. Gross, Chair Emeritus Directors Emeritus William H. Dunlap Sheila T. Francoeur Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh

2. Anecdotal evidence from Fed Bank of Boston, January 14, 2015 Sales or revenues are ahead of year-earlier levels according to most New England business contacts in the manufacturing, retail, and advertising and consulting sectors. Commercial real estate markets are steady to improving and most residential real estate markets in the region continue to see price increases and sales declines. With a few exceptions, manufacturers and retailers are not increasing employment, while advertising and consulting firms continue to add modestly to headcounts. Cost pressures vary, with selective price increases planned by several respondents. The 2015 outlook is positive for almost all responding firms.

3. NH – Less of a decline, but a slower recovery

4. Manufacturing, construction and financial activities have not recovered, government shrinks Source: NH Economic and Labor Market Information Bureau

5. 2011-2013 job growth still leans toward below average wage jobs Source: NH Economic and Labor Market Information Bureau

6. Portsmouth Area growth in Finance and Health Care

7. Rockingham County unemployment declines as employment increases

8. New Hampshire Job Creation – Region and US

9. Migration slowed in last decade

10. NH Residential Real Estate Sales and Prices 10

11. Similar trends in Rockingham County 11

12. Home Prices Return to the Long Term Trend:

13. 13 But Rental Prices Have Continued to Rise New Hampshire Rents – NHHFA Surveys

14. 14 Vacancies Have Sustained Ever Increasing Rents

15. 15 Another Sign of a “Normal” Housing Market

16. New Hampshire Home Building

17. NH Foreclosures – Worst is Over

18. Real Estate Activity 40% below the Peak Source: Monthly Revenue Focus, NH Dept. of Admin Services

19. Declines in Prices and Interest Rates Affect Affordability

20. But……. NH’s Young households are burdened by highest level of student debt in the Nation; Lending standards are more rigorous—Qualifying Mortgage, 43% debt to income limit, etc.; With rents rising and mediocre job quality, more difficult to save and qualify; Nearly 20,000 foreclosed units in past several years in the state—some will not qualify; Lack of liquidity is keeping boomers in larger houses than they need; Prices and interest rates are rising in past several months, blunting recent affordability improvements.

21. 21 NH’s Changing Housing Environment Has Consequences New Hampshire’s population growth is slowing down Job quality is poor Elders will be increasingly larger share of owners and renters Young home buyers are challenged Recent trend away from ownership and towards rental Different problems in different regions General public, town officials and business are not aware of issues affecting NH’s housing Fewer new households, and fewer families Overpayment problems for low income renters Elder overpayment, and Elders not aware of options available Future home owners not aware of ownership pitfalls and advantages Multi-family production shortages Geographic diversity more important than urban core. Town officials not comfortable changing existing regulations. Environment Consequences Full report at: http://www.nhpolicy.org/report/housing-in-nh-pt-1-big-houses-small-households

22. NEEP Forecast for New Hampshire October 2014 The Granite State will add only a few hundred manufacturing jobs over the next five years. However, it is expected that Granite State manufacturing output will continue to increase in the forecast period as it has in the past five years. In the private services sector employment will increase by about 2.0 percent annually in the forecast period. The fastest rate of growth will occur in Professional and Business Services, followed by Leisure & Hospitality, and Education and Health Services employment. The New Hampshire real estate market has finally seen a return to normal (pre housing bubble) price appreciation and sales growth, according to state realtors. Foreclosure recordings declined steadily over the past year. The state rental market remains strong with rental costs leveling and vacancies remaining below 5 percent in most areas.

23. Look to an Improving National Economy, Pushed by Housing and Low Energy Prices

24. Labor Market Improves

25. Businesses Have Never Been as Profitable… Sources: BEA, Moody’s Analytics After-tax corporate profit margin, %

26. 26 …And Have a Significant Energy Advantage Sources: Country sources, Moody’s Analytics Natural gas price, $ mmbtu Industrial electricity prices, $ Mwh U.S. China Italy Korea Japan India Germany U.K. France

27. Households Have Delevered… Sources: Equifax, Moody’s Analytics $ tril

28. Sources: Census, Moody’s Analytics Vacant homes for sale, for rent and held off market, ths Housing Will Provide the Catalyst…

29. …Meaning More Homebuilding and Jobs Source: Wall Street Journal, Moody’s Analytics Millions of jobs

30. New Hampshire Center for Public Policy Studies Want to learn more? Online: nhpolicy.org Facebook: facebook.com/nhpolicy Twitter: @nhpublicpolicy Our blog: policyblognh.org (603) 226-2500 “…to raise new ideas and improve policy debates through quality information and analysis on issues shaping New Hampshire’s future.” 30 Board of Directors James Putnam, Chair David Alukonis Eric Herr Dianne Mercier Catherine A. Provencher Todd I. Selig Michael Whitney Daniel Wolf Martin L. Gross, Chair Emeritus Directors Emeritus William H. Dunlap Sheila T. Francoeur Stuart V. Smith, Jr. Donna Sytek Brian F. Walsh

31. NH excels on “current climate” indicators

32. But NH lags on “future climate” indicators