NOTE: To print these slides in black on white, choose grayscale under Options in print preview.

MISSISSIPPI ECONOMIC OUTLOOK 2010-2015

NATIONAL TRENDSMISSISSIPPI TRENDS

EMPLOYMENT

INDUSTRIES

STATE BUDGET

National Economy in 2010

Recent profits, equipment spending strong Private sector jobs being added Inflation not a problem; oil prices moderate Exports growing

Stimulus spending slowing

Consumer, business spending tentative

Employment growth slow

Housing not yet on upswing

Toxic assets remain on financial books

Mississippi Economy in 2010 Housing, financial bubbles less severe Job loss slowing, retail sales improving Tax revenues stabilizing Major projects boost spending Some of $2.8 billion stimulus to MS remains

Uncertainties, unemployment impacting consumers

Construction, manufacturing hit hard

Tax revenues low relative to state budget

Long-term challenges on hold

5

MS Employment: Comparing Periods of Contraction

-6-5-4-3-2-101234567891

0111213141516171819202122232425262728293031323334353637383940414243444546474849505152535455565758596061626364656667686970717273747576777879808182838485868788899091

88

90

92

94

96

98

100

102

Feb 08 - Present May 2000 - Dec 2007 Jun 80 - Sep 1985

Employment is indexed to month of Peak Employment Level

Months From Peak Employment: Zero is the Peak

Mississippi versus U.S. Employment Index Quarterly Data

Source: MS Center for Policy Research & Planning, I.H.S. Global Insight.

07Q1

Q2

Q3

Q4

08Q1

Q2

Q3

Q4

09Q1

Q2

Q3

Q4

10Q1

Q2

Q3

Q4

11Q1

Q2

Q3

Q4

12Q1

Q2

Q3

Q492

94

96

98

100

102

Employment as % of 2007:Q1 Employment Level

MSUS

Year

Per

cent

Mississippi Employment GrowthAs of July ,Year-to-Date Versus 2009

Source: Data from MS Dept of Employment Security.

ConstrManuf

Transport,UtilLeisure,Hosp

Business,ProfFinance

MiningTradeGovt

Health,SocialTOTAL

-12 -10 -8 -6 -4 -2 0 2 4

-10.6-4.1

-3-3-3

-2.4

-1.2-0.2

0.700000000000001

3-1.5

MISSISSIPPI CHANGE IN EMPLOYMENT Year-To-Date 2009-2010

Percentage Change

Mississippi Employment GrowthJuly 2009 versus July 2010

Source: Data from MS Dept of Employment Security.

ConstrManuf

Leisure,HospFinance

Transport,UtilTradeGovt

Health,SocialBusiness,Prof

MiningTOTAL

-12 -10 -8 -6 -4 -2 0 2 4 6 8

-10.1

-2.9

-1.5

-1.3

-0.9

0.600000000000001

0.81

2.8

7.3-

0.600000000000001

MISSISSIPPI CHANGE IN EMPLOYMENT July 2009 versus July 2010

Percentage Change

Unemployment Rates, Mississippi Urban Areas

Source: U.S. Bureau of Labor Statistics.

Mississippi Gulfprt-Biloxi Hattiesburg Jackson Pascagoula

10.4%

8.2%8.6%

8.2%8.9%

11.5%

9.3% 9.5%9.2%

10.0%

UNEMPLOYMENT RATES, STATE AND MSAs, July 2009 & July 2010

(U.S. 9.5% - July)

Jul-09 Jul-10

Gulf Coast Employment July 2010 versus August 2005

Source: Data from MS Dept of Employment Security.

TOTAL EMPLOYMENT

Construction

Manufacturing

LeisureHosplty(G-B)

Transport & Utilities

Retail Trade

Government

60% 80% 100% 120% 140%

94%

126%

99%

74%

92%

113%

103%

Leisure/hsplty employment in G-B down 3.1% versus last July

MS Regains 2000 Employment Level In 2015

Source: MS Center for Policy Research & Planning, I.H.S. Global Insight.

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

92

94

96

98

100

102

104

106

108

EMPLOYMENT AS A PERCENTAGE OF 2000 EMPLOYMENT LEVELS, U.S. & MISSISSIPPI

MSUS

Year

Per

cent

Employment By Sector 2010, MS vs. U.S.(Percent)

Source: US Bureau of Labor Statistics.

0%

10%

20%

23%

13%

16%

11%

4% 4% 4%

11%

8%

17%

13%

MS US

Construction Employment, Coast and Rest of Mississippi, 2005-10

Aug2005

NovFeb

May

Aug-06

NovFeb

May

Aug-07

NovFeb

May

Aug-08

NovFeb

May

Aug-09

NovFeb

May70

90

110

130

150

170

190

CONSTRUCTION EMPLOYMENT IN STATE AND COASTAL MSA'S

August 2005 = 100 Total

Coast

Rest of State

2007 2008 2009 20102006

MS And US Housing Market % Change 2007:Q2 – 2009:Q2

Median Price

Sales Housing Starts

-5%

-39%

-63%

-22%-17%

-63%

SALES EXISTING HOMES, STATE AND U.S. Q2:07 to Q2:09

MS US

Mississippi Housing Market % Change 2009:Q1 – 2010:Q1

Median Price Sales Housing Starts

-2%

10%

-27%

-1%

9%

16%

SALES EXISTING HOMES, STATE AND U.S. % Change 2009:Q1 - 2010:Q1

MS US

Value of Housing Building Permits Mississippi, Aug. 2008 - July 2010

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul20

40

60

80

100

120

140

160

180

Value of Residential Building Permits($ millions)

08-09 09-10

Foreclosures and Past Due Payments

Mississippi Housing Market

Source: Mortgage Bankers Association.

J-00 J-01 J-02 J-03 J-04 J-05 J-06 J-07 J-08 J-09 J-100%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Past Due

In Foreclosure

US

US 4.6% MS 3.0%foreclosure rate,Q2

Major New Projects

Port at Gulfport $570 million

Schulz Extruded Products $300 million

Enterprise for Innovative

Geospatial Solutions $279 million

Twin Creeks Technologies $175 million

Toyota Auto Plant $1.3 billion

LNG Project $1.1 billion

Severstal Expansion $500 million

Keesler Air Force Project $950 million

Source: Mississippi Authority Development

Mississippi Retail SalesAugust 2008 to July 2010

Source: Mississippi Department of Revenue.

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun2,500

2,700

2,900

3,100

3,300

3,500

3,700

3,900

4,100

4,300

4,500

Retail Sales$ millions

08-09 09-10

Transfers to General Fund August 2008 to August 2010

Source: Mississippi Department of Revenue.

Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug200,000,000

400,000,000

600,000,000

General Fund Revenues

08-09 09-10

Growth in General Fund Transfers FY2009 versus FY2010

Gaming Fees&Taxes

Indiv Income Tax

Sales Tax

Corpor Income Tax

Use Tax

Insur Premium Tax

TOTAL G.F. Revenue

-12 -11 -10 -9 -8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3

-10

-9.2

-7.3

-4.6

1.1

1.4

-5.8

Percent Change FY2009 to FY2010

Growth in State General Fund Transfers ( August 2009 versus August 2010)

SOURCE: MS Dept of Revenue.

Gaming Fees&Taxes

Indiv Income Tax

Sales Tax

Corpor Income Tax

Use Tax

Insur Premium Tax

TOTAL G.F. Revenue

-50 -30 -10 10 30 50 70 90 110 130 150 170

-2.3

8.8

0.3

147

-4

-28.8

4.1

Percentage Change

FY2011

GROSS STATE PRODUCT $93.1 billion

MISSISSIPPI BUDGET $19.1 billion

Federal Funds $9.3 b.

State-Source Spec. Funds $5.4 b.

State General Fund $4.4 b.

Source: MS Dept of Finance & Admin.

Economic Forecast 2009 to 2010 (Percent Change)

Output Employment Personal Income Inflation

1.9%

-1.1%

2.6%

0.9%

2.6%

-0.5%

2.8%

0.9%

Growth Rates, Mississippi and US, 2009-10

MS US

Economic Forecast 2010 to 2011 (Percent Change)

Output Employment Personal Income Inflation

2.2%

0.7%

2.9%

1.3%

2.2%

0.9%

3.1%

1.4%

Growth Rates, Mississippi and US, 2010-11

MS US

Projected and Past Employment Growth MS and US

Source: MS Center for Policy Research & Planning, Global Insight.

2004-2009 2010-2015-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

-0.5%

1.4%

-0.1%

1.8%

Actual and Projected Annual % Growth of Employment

MS US

Projected and Past Output Growth MS and US

Source: MS Center for Policy Research & Planning, Global Insight.

2004-2009 2010-20150.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0.8%

2.7%

1.0%

3.1%

Actual and Projected Annual % Growth of GSP and GDP

MS US

Employment Forecast by Sector (average annual rate of change)

Source: MS Center for Policy Research and Planning.

Business,Other ServHealth & Social Asst

ConstructionTransport & Utilities

Manufacturing Trade

Leisure,Hospitality Agric, Forest,Fish

GovernmentFinance, Real Est

MiningTOTAL

-2.5 -1.5 -0.5 0.5 1.5 2.5 3.5

2.72.42.4

2.11.9

1.30.8

0.60.5

0.4-1.6

1.5

MISSISSIPPI EMPLOYMENT PROJECTIONS Average Annual Growth Rates 2010-2015

WILL THIS CRISIS BE AN OPPORTUNITY LOST?

Financial Sector: Transparency & Accountability

Restructuring: Health, Energy Social Safety Net State Budget: Performance-Based

Budgeting, Policymaking Capacity,

Tax Reform

EDUCATION AND THE SKILL GAP

29% of persons in U.S. from 25 to 64 years old have a bachelor’s degree or higher

Only 20% of persons from 25 to 64 years old in Mississippi have a bachelor’s degree or higher

SOURCE: U.S. Census and U.S. Monthly Labor Review, U.S. Dept. of Labor, 2007.

SOURCE: PUMS Dataset, 2000 Census.

8%

12%

21%

36%

5% 4% 5%

11%

0.0%

10.0%

20.0%

30.0%

40.0%

Men, NotBlack

Women, NotBlack

Black Men BlackWomen

H.S. B.A.

POVERTY RATES OF ADULTS, AGED 18 - 64,BY LEVEL OF EDUCATION, MISSISSIPPI

Fighting Poverty: Education and More Required

IN SUMMARY Starting climb from bottom

Jobs, state revenues stabilizing US, world growth will be a positive Major projects on-line

Long-term challenges remain Ability to innovate, compete Education, research State budget, health, energy, social issues

MISSISSIPPI ECONOMIC REVIEW& OUTLOOK

and MISSISSIPPI’S BUSINESS at

www.mississippi.edu/URC

Join MS Economy Listserve: contact mhill@mississippi.edu University Research Center