1 / 55

Minnesota s Economics Demographics Looking To 2030 Beyond

Minnesota Has Been Very Successful (Especially For A Cold Weather State at the End of the Road) . Our economic growth rate has exceeded the national averageOur population growth rate leads the frost beltWe rank with the leaders on many social and economic indicatorsEducation has been a key contributor to the state's success.

alva
Download Presentation

Minnesota s Economics Demographics Looking To 2030 Beyond

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

    1. Minnesota’s Economics & Demographics Looking To 2030 & Beyond Tom Stinson, State Economist Tom Gillaspy, State Demographer July 2008

    2. Minnesota Has Been Very Successful (Especially For A Cold Weather State at the End of the Road) Our economic growth rate has exceeded the national average Our population growth rate leads the frost belt We rank with the leaders on many social and economic indicators Education has been a key contributor to the state’s success

    3. Minnesota’s Economy Has Changed Since the 1960s

    4. Minnesota’s Per Capita Personal Income Exceeds the U.S. Average by 6 Percent Minnesota ranked 14th in personal income per capita in 2006- - - In 1960 Minnesota ranked 25th Personal income per capita grew at an average annual rate of 6.8 percent between 1960 and 2005 Since 1960 per capita personal income has grown faster in Minnesota than in most states outside the Southeast

    5. Minnesota’s GDP Growth Rate Exceeded the US Average, 1967-2007

    6. Minnesota Private Industry Has Generally Matched National Growth Index Of Private Industry GDP

    8. Payroll Employment Growth 1972-2007

    9. Payroll Employment in Minnesota Has Grown Faster than the US Average

    10. Manufacturing Employment 1972-2000

    11. Minnesota’s Unemployment Rate Has Been Well Below the US Average

    12. Minnesota Per Capita Income Has Grown Faster Than The Nation’s

    14. Minnesota Ranks Highly in Many Social/Economic Indicators 2nd percent of 16-64 employed (76.9%) 2nd cost of living adjusted per capita income (OK DOC) 8th lowest poverty rate 1st percent with health insurance 2004-06 ave 9th median family income in 2006 2nd Kids Count 2007 4th most livable state (Morgan Quinto Press) 4th lowest rate of disability among people age 16-64 1st with at least high school degree (90.7%) 12th with at least a bachelor’s degree 1st home ownership 2nd United Health Foundation ranking of state healthiness 2007

    16. From 2004 to 2007 Minnesota Underperformed the US Averages Personal income growth US 6.2% MN 4.4% Per capita personal income growth US 16.6% MN 13.5% GDP growth US 8.4% MN 4.8% GDP per capita growth US 5.4% MN 2.6%

    17. Minnesota Payroll Employment Has Struggled Since Early 2006

    18. Minnesota’s Unemployment Rate Now Is Similar to the US Average

    19. US Manufacturing Employment Fell Faster Than MN, 2000-2007

    20. Minnesota Ranked 30th in Employment Growth, 2000-2007

    21. Minnesota Ranked 24th in Real Per Capita GDP Growth, 2000-2007

    22. Real Per Capita GDP Growth Compared to Neighboring States 2000-2007

    23. Real Per Capita GDP Growth Compared to Midwestern States 2000-2007

    24. Real Per Capita GDP Compared to High Tech States 2000-2007

    28. Economic Fact of Life #1 First Principle of Economic Growth Standard of Living depends on output per resident Output = Output per Hour * Hours Worked

    29. Four Mega-Forces Will Shape Minnesota’s Economy Globalization Technology Energy prices Demography

    30. The Three Big Demographic Trends Growth and suburbanization Increased diversity Aging

    31. By 2020 Minnesota will add about ž Million People & 1/3 Million Households

    33. Upper Midwest Becoming More Diverse But Still Less Than The Nation

    34. In 2006, Minnesota’s Foreign Born Workforce Was 240,000 or 8% Of The Total Workforce

    35. From 2010 to 2020, Minnesota Will See Large Increases Age 50s and 60s We recalibrated our demographic forecasting model this year, updating it to the most recent data and found that people still age about 1 year every 12 months. The updated forecasts tweaked the numbers a bit, but the basic trends are still there. Over the next decade, we will see a large increase in the number of people age 50 to 70 (the Boom Generation), declines in the number of people age 40-50 (Gen X), and declined in the number of people 15-24. The number of younger children and young adults age 25-35 (Gen Y) will increase We recalibrated our demographic forecasting model this year, updating it to the most recent data and found that people still age about 1 year every 12 months. The updated forecasts tweaked the numbers a bit, but the basic trends are still there. Over the next decade, we will see a large increase in the number of people age 50 to 70 (the Boom Generation), declines in the number of people age 40-50 (Gen X), and declined in the number of people 15-24. The number of younger children and young adults age 25-35 (Gen Y) will increase

    36. The Number of Workers Turning Age 62 Will Jump 30 Percent in 2008 The leading edge of the Boom generation just started turning 62 in the past couple weeks. AARP reports an increasing lines at Social Security offices and the retirement boom is about to begin. This is the year it beginsThe leading edge of the Boom generation just started turning 62 in the past couple weeks. AARP reports an increasing lines at Social Security offices and the retirement boom is about to begin. This is the year it begins

    37. Childless Couples And 1-person Households Projected To Grow

    38. Competition For The Future Workforce Will Increase

    39. Labor Force Growth Is About To Slow Sharply

    40. Migration Increases in Importance as Labor Force Growth Slows

    41. The Three Most Important Factors For Future Economic Success Productivity Productivity Productivity

    42. Economic Fact of Life #2 Productivity depends on The stock of physical capital The stock of human capital Education Health status The stock of infrastructure Advancements in technology Bakery Example Physical capital—More ovens increase the amount of bread that can be baked at any time. More training for the bakers will increase the range and quality of the product. Instead of just slice bread, maybe now gourmet artisan breads. Bread needs baked every day. Illness can disrupt the work flow—an who wants bread from a sick baker anyway. Infrastructure—Congestion and poorly maintained roads slow delivery of the bread—late delivery can be disastrous in this business Advancement in technology—a new yeast can change the quality or the speed of rising of the bread. New machines (kneading, ovens, etc) can save labor. Bakery Example Physical capital—More ovens increase the amount of bread that can be baked at any time. More training for the bakers will increase the range and quality of the product. Instead of just slice bread, maybe now gourmet artisan breads. Bread needs baked every day. Illness can disrupt the work flow—an who wants bread from a sick baker anyway. Infrastructure—Congestion and poorly maintained roads slow delivery of the bread—late delivery can be disastrous in this business Advancement in technology—a new yeast can change the quality or the speed of rising of the bread. New machines (kneading, ovens, etc) can save labor.

    43. Academic Research Is a Key Factor in State Economic Growth “the lags between R&D and economic outcomes are quite long (at least years, and more likely decades) “The state … may do well for a while by drawing upon its existing stock of knowledge capital “How the state of Minnesota will fare in the future … will crucially depend on its recent and future investment in R&D *Long Gone Lake Wobegone, Pardey, Dehmer and Beddow, 2007

    44. R&D Spending Slowed in the Early 90s We Are No Longer Above Average

    46. Education Is The Key To Productivity Minnesota High School Graduation Ratio

    48. Minnesota’s Population Will Change The Three Largest Cost Drivers In The State Budget

    49. Health Care Spending Jumps After 55 U.S. Health Care Spending By Age, 2004

    50. State Taxes Paid by a Married Couple Before and After Retirement

    51. State/Local Government’s Share of Personal Income Has Declined

    52. Estimating the Volatility of a System of Taxes Markowitz’s modern portfolio theory used as a guide: The expected growth rate in revenues is the weighted sum of the individual growth rates Portfolio volatility is the square root of the weighted sum of the variances and covariances of the individual components

    53. Portfolio Theory Suggests Using a Tax System that Minimizes Volatility for a Given Growth Rate Given the trend growth rate, variance and covariance of each major tax, an Efficiency Frontier Line (EFL) can be estimated The EFL shows combinations of taxes that provide the lowest volatility for each growth rate Points below the frontier are suboptimal. The EFL is determined using quadratic programming to minimize state tax revenue volatility, s2T, given growth rates gT

    56. Summary Minnesota has been very successful We are in a period of rapid and critical change What we do today will shape our future for the next quarter century Productivity increases will be the key to further growth throughout Minnesota

More Related