Examine the chart above and answer the following questions in at least 200 words.
New Hampshire’s economy is on its way up. Over the last five years the state’s population has had an annual growth rate of 0.7%, which is 18th out of the 50 US states by growth rate. New Hampshire’s gross state product has grown 2,5% over the past 5 years, reaching $84 billion in 2022. New Hampshire is not in a recession right now, but the state is one of many states who are poorly prepared financially for the impact of a moderate recession. According to the chart above, a recession might be around the corner, because the nonfarm payrolls are not increasing as much as earlier, but it is still not decreasing which means that we are still not in a recession.
New Hampshire’s economy is quite similar to the US economy. According to the chart, almost every time the national economy goes into recession, New Hampshire goes into a recession as well. If we study the chart we can see that in the last five recessions in the US, New Hampshire’s nonfarm payroll has decreased during every single one of them. However, New Hampshire did not seem to go into a recession in the national recession in 1980, which is the only time this has happened in recent years. It is not always the same if New Hampshire’s economy leads or lags according to a national recession. However, most of the time the national economy goes into a recession before it hits New Hampshire, which is the case in the last three recessions.
The top three industries in New Hampshire are insurance, new car dealers, and public schools, and they generated $8.6 billion, $8.1 billion and $6.3 billion in 2022. It has not always been these three on top, with tourism and hospital being major industries as well, but these three have been on top recently.
If a recession is highly likely then Bank of New Hampshire should continue building up their loss reserves and start thinking about how to use them, conduct expense reviews, try to maximize yield on assets, and look to sell less profitable assets. They should also contact their customers and let them know that a recession is about to happen, just to make everyone else ready too. The bank should also gather as much cash as possible, because cash is king in terms of getting through a downturn or recession, and they should definitely make sure that their relationships with their lenders are still strong. It would be terrible if the bank’s lenders all dissapeared once times get tough.
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, |
| 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. |