Examine the chart above and answer the following questions in at least 200 words.
Although NH’s nonfarm payroll is still increasing and expanding, it is quickly decreasing in pace. The NH economy is also lagging US recession, which is a trend that the NH economy faces during national recession. This means that a recession could be around the corner.
In NH, we fell into recession every time the National Economy fell into recession except the recession of 1981. The Nonfarm payroll decreases during recession and during the 1981 recession you can see that NH did not suffer from recession like the national economy. I would still say NH’s economy is very similar to the economy; NH has a recession when the US has a recession. During the time of a national recession, the pace of NH nonfarm payroll decreases but it is still positive and expanding. These jobs started to decline in the middle of the US recession. This means that the NH economy lagged the national economy. You can see that during almost all of the national recessions (except the 1990 recession), NH went into recession about half way through the national recession.
The most important industry in NH in the past was retail trade. This is because there is no general sales tax in NH. Retail trade is still large in NH for this reason. In the last decade, the most important industry in NH was the Real Estate and Renting and Leasing industry. The location quotient in dollars is $1,447 million which means this industry in NH is that much larger than in the country. You can see that this industry is very important in NH relative to the national economy. The second most important industry in NH is the Health Care and Social Assistance industry. This industry has stayed very consistent, with a location quotient above one for over 20 years. The third most important industry in NH is the Management of companies and enterprises industry. In the past, this was not the case for this industry. For many years, the location quotient was less than one, meaning that it was less important to NH’s economy relative to the national economy. For 12 consecutive years, 2008-2020, this industry’s location quotient was less than one. In 2021, the Management of companies and enterprises had a location quotient of $1,142 million in dollars which means that this industry became very important to NH’s economy relative to the national economy.
Grappone is a regional business, which means that they are affected by Northern New England. As they state below, Grappone has survived recessions before. A recession is unavoidable but it’s important to prepare so your business can survive and grow. I would suggest that Grappone closely monitors inventories and reduces unnecessary inventory items. It’s important that Grappone manages their cash so they have enough to survive the downturn. Some ways to raise cash and cut costs include slowing hiring, selling account receivables, securing a larger credit line, getting long-term debt, and reevaluating capital spending. Maintaining a good relationship with banks by disclosing the company’s condition early and fully can be helpful as well during recession. Having a good financial footing before a recession can help you to take advantage of a recession rather than suffer.
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. The health care
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, |
| 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. |