transportation and minnesotas economic competitiveness tom stinson tom gillaspy september 2012
TRANSCRIPT
We Are Headed to a New Normal
• The Great Recession is over and the economy is growing -- but we will not return to where we once were
• We are moving to a New Normal• The U.S. is not alone -- it is happening globally• Those who recognize this and adapt first will be
most successful• The next four years will be critical
Minnesota Has Been Very SuccessfulEspecially 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
Minnesota’s Per Capita Personal Income Exceeds the U.S. Average by 7.2
Percent
• Minnesota ranked 12th in personal income per capita in 2011 - - - In 1960 Minnesota ranked 25th
- - - In 1960 per capita personal income in Minnesota was 95 percent of the U.S. average
• Personal income per capita grew at an average annual rate of 6.1 percent between 1960 and 2011. The national rate of growth was 5.9%
Minnesota’s Current Success Is Due to Decisions Made 50+ Years Ago
• Far sighted private sector and public sector decision makers established the foundation for growth in Minnesota’s economy
• Dealing with challenges brought by the baby boom was a key to our success
• Wise investments were made
The Number Of Minnesotans Turning Age 65 Is Increasing Sharply This Year
Census ACS and counts and Mn State Demographer forecasts, the 2012 increase is 36%
From 2010 to 2020, Minnesota Will See Large Increases Age 50s and 60s
20,15036,190
47,3305,050
-30,680-9,980
47,95061,920
-2,680-63,650
-42,31054,240
102,960112,540
91,37041,400
8,44016,500
0-45-9
10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-84
85+
Source: Minnesota State Demographic Center, rev 2007Numbers are rounded
Annual Percent Change Minnesota Total Labor Force
Minnesota State Demographer forecast, revised January 2012
Gillaspy Demographics www.gilldem.com
Economic Facts of Life
Standard of Living depends on output per resident
Output = Output per Hour * Hours Worked
If the ratio of workers to residents declines productivity will need to increase if we are to maintain our current living standard
The “New Normal” Probably Means• Labor and talent will be the scarce resources
• Slower economic growth
• A single-minded focus on productivity
• Higher interest rates
• A change in the land rent gradient
• Chronic government deficits & cuts in service
• Increasing numbers of retirees
• A more diverse population
• More uncertainty about the future
The Third Industrial Revolution Is Transforming Economic Activity
Advances in robotics, materials, software, bioengineering, and the web are fundamentally changing where and how economic activity takes place.Innovation is replacing physical capital as the foundation of economic growth.Physical location will be less important and those bound to it will find competition increasingly difficult.
WWW.GILLDEM.COM
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
Increasing Productivity Also Means
Making things better
(improved quality)
Making better things
(innovation, new products)
Long term growth will require innovation and quality
improvements
Focusing Just On Reducing Costs May Be Short Sighted
Transportation Systems and Competitiveness in the New Normal
Traditional Focus: •Markets for Minnesota commodities•Markets for Minnesota products and servicesExpanded View:•Transportation system as an amenity•Time cost of commuting a recruiting plus
Funding Transportation Systems Will Be a Challenge in the New Normal
• Seniors will be a greater percentage of the electorate– Issues of health care and aging will grow in importance– Tax increases will continue to be unpopular
• Current financing sources may not generate the revenue needed to meet future needs
• Traditional support groups may be less successful in gaining resources for transportation