Presentation by Barry Bluestone

1. What’s UP with the Massachusetts Economy? MAPC Fall Council Meeting Crowne Plaza Hotel Natick, Massachusetts October 26, 2010 Barry Bluestone

2. The Economic Picture The U.S. Context

3. A Fragile U.S.Economic Recovery… Monthly payroll employment change, excl. Census Jobs Consistent monthly job growth of over 150K will be necessary to reduce unemployment

4. …As Federal Fiscal Stimulus Fades Stimulus Contribution to real GDP growth, % Cash for Clunkers Recovery Act Tax rebate checks Housing tax credit Source: Moody’s Analytics

5. Profits Surge and Jobs Should Follow… Profit growth, lagged 3 quarters (R) Job growth, % change year-over year (L) Sources: BLS, BEA

6. Federal debt-to-GDP ratio The average federal debt-to-GDP ratio since WWII is 40% Sources: Treasury, Moody’s Analytics Worries over Federal Debt

7. The Economic Picture Massachusetts Rebound

9. Massachusetts

10. The Massachusetts economy is growing faster than that of the U.S.

15. However, metro areas outside of Boston are still in recession,

16. The Greater Boston Housing Market

23. The Foreclosure Crisis

30. The Demographic Picture

32. New Hampshire +20.4% Vermont +17.0% Maine +13.2% Rhode Island +11.3% Massachusetts + 9.1% Connecticut + 8.0% U.S. +14.8%

33. U.S.: 99% Mass: 135%

35. Net Increase in Households: 222,700 Under 55: -77,700 55+: +300,371

37. Impact on State and Local Government Will the aging of the population have a major adverse effect on state and local revenue? Will the aging of the population lead to an increased need for state and local public services Will the aging of the public employee workforce create a drain on state and local budgets?

38. The “Third Civil War” 19th Century Civil War North-South: Slavery 20th Century Civil War North-South: Where MFG takes place 21st Century Civil War Which regions, states, and cities and towns will be able to retain and attract young working families to fill in the labor force and revenue gap? What factors are most important in winning the 3rd Civil War?