Examine the chart above and answer the following questions in at least 200 words.
As of right now, New Hampshire is recovering from the 2020 recession due to the pandemic. The numbers for non farm in New Hampshire are around 2 percent, so not exactly increasing, but not below the line yet. The number of building permits are increasing rapidly which is a good sign. A recession could hit New Hampshire at any time, but with the data provided it appears that the state is doing okay. Comparing the New Hampshire economy to the U.S. economy, percentage wise, New Hampshire is quite similar to the U.S. economy. With the data provided, New Hampshire tends to hit a recession every time the U.S. gets hit. New Hampshire declines with the U.S. in a recession for both non farm employees and building permits. The data seems to favor New Hampshire leading for recession in most cases rather than lagging with the U.S. As of right now, the top three industries in New Hampshire are Real Estate and Rental and Leasing, Health Care, and Management of Companies. The top three industries have no always been the top three. Management of Commerce just became the top three in 2021 compared to its previous years of not being important. Retail Trade has gone down in numbers and its not the top three at the moment possibly due to the lack of consumption since the pandemic. Bank of New Hampshire should focus more on the regional economic cycle rather than the national economic cycle since this bank is located primarily in New Hampshire. If a recession occurs, they should take a look at the real estate market and employment levels to see any significant fluctuations. With this information, they can decide whether to let people go or possibly cut back on giving loans out to people so they can save their money.
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.
Response from businesses
| 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, |
Bank of New Hampshire as discussed is located mainly in NH, so national economic cycles are not super important, but need to be analyzed to keep track of how the market is doing. Understanding the population growth rate in the state of New Hampshire is important since an increase in this rate can result in consumers spending more money on homes, construction, etc. When this happens, money will be needed from the bank, a loan, and this helps the bank create a profit. Overall, Bank of New Hampshire relied more on the regional economic cycle than the national cycle and should continue to look at the numbers within population, interest rates, population, and the housing market.