November 9, 2008
By GARRY RAYNO
New Hampshire Union Leader Staff
New Hampshire so far has escaped the brunt of the economic calamities befalling the rest of the United States, but amid reports of surging national unemployment rates, several local economists warned that Granite State is far from immune.While the state's residents and businesses have not experienced the credit freeze plaguing the nation, they have found it more difficult to qualify for loans. And while New Hampshire's unemployment rate for September remained relatively low at 4.1 percent, that was the highest it had been in more than four years.State unemployment information for October won't be available until the Department of Employment Security releases it one week from tomorrow, but the national rate is out, and it's ominous: 6.5 percent, the highest level in 14 years. Altogether in 2008, more than 1.2 million Americans have lost their jobs."The New Hampshire economy is significantly better than any other New England state and better than the nation. It's astonishing how well we're doing," said Peter Francese, director of demographic forecasts for the New England Economic Partnership. "In New Hampshire, we are acting economically as if we were some Sunbelt state."Still, the picture here is mixed.According to information from the DES's Economics and Labor Market Information Bureau, New Hampshire through September had a net gain of 2,100 non-farm jobs -- something no other New England state could claim. But the state did lose 1,500 jobs in September -- before the national surge in unemployment and before one of its largest employers, Fidelity Investments, announced that significant layoffs are forthcoming.
Gains and losses
In the first nine months of the year, the state's hardest-hit industries were hospitality, with 1,500 jobs lost, and construction, down 1,300 jobs. Manufacturing lost 700 jobs; information services another 100.The manufacturing sector is struggling, said Anita Josten, a research analyst with the ELMIB, but that is part of the economic evolution. "It's not concentrated in any one industry," she said of the manufacturing sector. "We have a good diversification. While weaker industries are struggling, others are doing well." Some sectors, meanwhile, have undergone recent reversals of fortune.The trades, transportation and utilities sector had a net gain of 1,200 jobs in the first three quarters, but that included 600 jobs lost in September. Likewise the financial services sector had a net gain of 400 jobs for the first three quarters, but that included 100 jobs lost in September. Pending October's employment numbers, the state's biggest winner to date has been the professional services industry, with a gain of 2,600 jobs. Education and health services has added 900, and government at all levels has added 400.
Economic independence
Of the state's 655,500-member workforce, approximately 100,000 are self-employed, Francese notes. "A lot of highly educated and highly skilled people have moved to the state, with a large number working for themselves and in the high-tech industry," he said. "They are smart enough and skilled enough not to be concerned about plant closings because they will find another job pretty quickly." Even though it has slowed, New Hampshire's economic growth remains more than twice that of any other state in New England state, and, according to Federal Reserve Bank of Philadelphia, the Granite State has the third-highest index of economic activity in the nation. New Hampshire also has a large population of wealthy retirees who live off their investment income. "In many ways in New Hampshire, a good chunk of our economy is not dependent on an industry because the (investment income) check comes in the mail," Francese said. The state's economy has moved from one based on unskilled labor to one based on skilled labor, which means higher wages and more resiliency, he said. "The question is 'Can we sustain it?' That's really an issue because our educational system is turning out bright young people, but they're not staying here," Francese said.
Warning signs, and hope
Russ Thibeault, president of Applied Economic Research of Laconia, said that while New Hampshire is currently faring better than the rest of the country, "looking forward I don't believe we will be able to slip this punch. Our consumers -- like the rest of the country -- will be nervous and pinching their pennies over the next year." He cited the continuingly distressed housing market as another reason for concern and noted state businesses are also beginning to feel some stress. "The clearest sign is the state BET (business enterprise tax) and BPT (business profits tax) revenue is below last year's level. That's not a good sign," Thibeault said. "The state budget is under as much stress as it's been in since the early '90s. It's not a pretty picture overall." According to monthly state revenue reports, business taxes produced $24.7 million less last month than in the previous October. For the first four months of the 2009 fiscal year, business taxes produced $32 million less than during the same period in fiscal 2008. The financial stress on Wall Street is only beginning to filter down to places like New Hampshire, Thibeault said. "We're seeing the tip of the iceberg and we don't know how deep it will be or how long it's going to last," he said. "There are no bright lights on the horizon." Jerry Little, president of the New Hampshire Bankers Association, disagreed. "Local financial institutions are well capitalized, and their portfolios are in good shape," he said. "They are ready to meet loan requests that come through door. Underwriting is a little tougher, and it may take a little longer, but there's plenty of capital in New Hampshire." The state does not have an abnormal level of defaults or foreclosures, Little said. "We're still seeing a good loan demand -- mortgages and small business loan requests," he said. But, Little added, if the economic news grows worse, people will be reluctant to make plans or follow through on plans, and that could result in lower loan demand.
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