Examine the chart above and answer the following questions in at least 200 words.
New Hampshire’s economy as of now is currently on a steep decline. State total non farm employees can be seen as declining rapidly and going into the negative before every recession. While New Hampshire isn’t currently in a recession it is believed that one is coming around the corner since non-farm employees are seen as a lagging indicator for New Hampshire and its economy. With non-farm employees seeing a year-over-year percentage change of 3.7 in September 2021 to 2.6 in September 2022. Looking at this data I can determine that New Hampshire is seeming to go into recession as non farm employees see a decrease and continue to go into a decline. Another indicator that New Hampshire is about to go into a recession is a decline in building permits which shows another indicator that the market is down and people aren’t building. A decline can be seen on 01/08/2022 when the year-over-year percentage change is at -25. Just a year earlier percentage change was at a much higher level of 21.2. Unfortunately, this reflects another indicator that a recession is around the corner. New Hampshire’s is very similar to its U.S. counterpart. Data shows that in the past every time New Hampshire goes into a recession so does the US economy. I can see this, especially when looking at data on total non-farm employees. Usually, the US goes into a recession, and then shortly New Hampshire’s job growth is seen declining. When Job Growth starts declining this is when an indicator that New Hampshire is in a recession. New Hampshire is a lagging indicator of the National economy since it usually goes into recession after the overall US economy. One outlier occurred in 1992 when New Hampshire entered the recession before the US economy and resulting in a much longer recession for New Hampshire than the rest of the country. New Hampshire’s top three industries currently are real estate and leasing, healthcare and social assistance, and management of companies and enterprises. Over time New Hampshire’s top industries have changed, prior, the top industry in New Hampshire was retail trade. Now retail trade is seen as only the 5th biggest industry in New Hampshire.
Question to the businesses A regional economic cycle is not perfectly synchronized with its national counterpart, although it tends to move up and down with the national economy. In addition to the broader national economy, two other factors influence a regional economy: the national cycle of its most important industries and its internal growth cycle associated with construction swings. There are two different perspectives to consider in analyzing a regional economy: when a company sells into a distinct local market and when a company produces in a local market and sells into a national or global market.
Please, discuss how the regional economy affects your business and what you do in response.
If a recession is highly likely then Bank of New Hampshire should start setting up a regional early warning system because it has a local market. Bank Of New Hampshire is located mainly in New Hampshire but, has locations all across New England. Therefore Bank of New Hampshire should monitor this regions main industries and watch non-farm employment in this area. Monitoring the regional area will give Bank of New Hampshire more time to prepare for a recession and know how this region will specifically reacts to recession.
| Business | Response from Business |
|---|---|
| Graponne | We are a regional business, so we are more impacted by what is going on in northern New England. From my perspective, the ’08-’09 recession was not as bad in New England as was the ’90-’92 downturn. New Hampshire was hit much harder in the early ’90’s. Many of NH’s largest banks failed in 1992, |
| Bank of New Hampshire | Our primary operating area is NH, and to a lesser extent all of New England, so regional economic cycles are important. We monitor economic data on the state and regional level – Fed in Boston puts out excellent information – and respond accordingly, |
| Comptus | We have no direct regional sales. 50%+ of our revenue is from International sales. Almost all domestic sales are through large distributors, so we have very limited visibility to regional activity. |