Economic Development: Demographics and Trends with Barry Bluestone (Feb. 6)

Barry Bluestone made a presentation the spoke to demographic data and fiscal crisis at the state and local level.  We all know that we are getting older, but some of the charts shown were just jaw dropping.  I sent Barry a note and will attempt to share his presentation data.  Here are a few highlights:

  • Real GDP growth is expected peak at 4.2% in 2013 and move back to a more moderate 2.5% over the next decade.
  • Even with the growth unemployment is not expected to get back to 6% until 2015.  Even this figure ignores underemployment and people that are not counted in the workforce.
  • This means state revenues are likely to continue to be bad.  Locally here in Rochester we are much better off.
  • Between 2007 and 2020 the number of US households are expected to grow by 14.8%.  Minnesota is expected to grow a better than average 15.8%.  This data has Arizona, Nevada, Florida, and Texas as the top growers, but this may be less so after the last few years.  Interestingly the growth in Texas, Arizona, Nevada, and Florida is making the states more diverse and significantly more liberal.
  • Between 2008 and 2018; Population between 18-54 will grow by 900,000 but population 55 and over will grow by 20,800,000.  Minnesota is interesting as many of our seniors tend to leave so we remain younger than some other places.  As our planning director has hinted, this is the death of suburbia in Rochester.
  • Another way to look at this is that 18-54 population will grow by 4.1% and 55+ will grow by 95.9%.
  • In the US 99% of the household growth will be 55+ between 2007 and 2020.  In Minnesota this is about 90%.  In Rochester, it may be even lower given our ability to bring in young professionals.  As an aside 530% of North Dakota’s household growth will be 55+.
  • Unemployment is bad nationally, but near full employment in Rochester (if you are not in construction), but by 2018 there will be 15 million new jobs for 9 million new workers.
  • Minnesota has the 5th highest deficit relative to budget.  Worse than California and Texas.  Looks like those 1999-2000 tax cuts aren’t working out so well…
  • Between 2010 and 2060 there will be a relative decline in sales and property taxes.
  • Money from Federal and State sources will not be coming.  Fortunately, Rochester is a big loser to Federal and State governments.  This will hurt others far more than us.
  • Health spending will continue to increase, everything else will decrease.
  • Local governments currently face a 12% fiscal gap going forward.
  • We weather all of this we must; control healthcare costs, provide more efficient local services, and regionalize some services.  Can you say park district…
  • We are well positioned in Rochester to grow our way through many of these issues.
  • Relative to other parts of the country we are very fortunate here.  We need to continue to ensure our quality of life remains outstanding.  We will need more culture, parks, and education to ensure that the best and the brightest want to be in Rochester.

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