New Hampshire is trailing the nation and Massachusetts in the economic recovery.
Far from the robust turnaround the Granite State is used to experiencing, one economist describes the state’s recovery as “lackluster.”
Dennis Delay, who participated in a regional economic forum hosted by the Federal Reserve in Boston last week, said job growth is averaging just 1 percent annually, down from the 4 to 6 percent seen after the recessions of the 1980s and 1990s.
“The New Hampshire economy is recovering, but the recovery has been disappointing,” said Delay, an economist with the New Hampshire Center for Public Policy Studies.
Delay characterizes the recovery as “lackluster” by New Hampshire standards.
Unemployment is improving — about 5.5 percent from 6.7 percent at the depths of the recession, he said.
“Even at 5.5 percent, that’s still 2 percent above what would be the normal unemployment rate in an economy firing on all cylinders,” Delay said. “It’s not great, frankly.”
This isn’t typical.
“Historically, New Hampshire has grown faster out of a recession,” said Community College System of New Hampshire chancellor Ross Gittell, an economist who participated in last week’s forum.
Rather than setting the pace for New England, this time around, New Hampshire is trailing Massachusetts and Vermont, he said.
Delay expects New Hampshire won’t approach its pre-recession employment, about 650,000, until the middle of next year. Massachusetts already has more jobs than before the recession; Vermont is expected to get there this year.
A Federal Reserve analysis for the first quarter of this year saw the job picture improving regionally.
“The region’s employment situation continued to improve through the first two months of 2013, with all New England states reporting year-over-year employment growth,” the Fed concluded.
“However, Massachusetts was the only state in the region to experience stronger year-over-year growth than the United States (1.8 percent versus 1.5 percent),” the analysis said.
New Hampshire is seeing no job growth in construction or manufacturing, Delay said.
“The mix of industries in New Hampshire is not as advantageous to us as it is for Massachusetts,” he said.
Massachusetts enjoys more jobs in growing fields, including financial services, benefitting from the rising stock market, and high technology, he said.
New Hampshire also isn’t seeing the influx of high earning, better educated people who have arrived in the aftermath of prior recessions.
“That’s not happening,” Delay said.
The housing market also is improving faster in Massachusetts than New Hampshire, he said.
The economic outlook from the forum, put together through the New England Economic Partnership, a group of economists throughout the region, came as no surprise to business and planning leaders in New Hampshire.
“I’d agree we’re probably lagging a little bit behind the nation,” said William Parnell, president of the Greater Derry Londonderry Chamber of Commerce. “I think we’ve been hurt by infrastructure issues and an inability to find an effective way to fund infrastructure.”
There are some bright spots locally, Parnell said, pointing to commercial projects in Derry. He said he is hearing small businesses are hiring, but nothing in the way of a major business expansion.
Parnell, whom Gov. Hassan appointed to a panel looking at infrastructure issues, said there has been a reluctance by companies to relocate to Southern New Hampshire due to questions about how the state will deal with infrastructure.
“I feel very strongly in New Hampshire we’ve got to find a way to deal with the infrastructure issues,” Parnell said.
Southern New Hampshire Planning Commission executive director David Preece shares Parnell’s concern over the need for infrastructure investment to boost the economy.
“We are lagging,” Preece said. “We are not spending money on infrastructure.”
The state needs to show the outside world it is willing to invest in schools, water systems and highways to get the job growth it wants, he said.
“We’ve got to make an investment in our infrastructure,” Preece said.
Startup companies that attract young professionals put access to reliable transportation systems at the top of their list of needs, he said.
Gittell said there is an opportunity for New Hampshire in proximity to Massachusetts.
“One thing we could do is connect our economy to that high growth in Massachusetts,” he said.
That means encouraging a skilled workforce for advanced manufacturing, allowing the state to grow with jobs coming out of Boston and Cambridge, Gittell said.
Southern New Hampshire towns are positioned to do so.
“That proximity has been a historical advantage,” Gittell said.
Infrastructure improvements would help, Gittell acknowledged.
“You can make the distance less of a barrier through improved transportation,” he said.
Preece sees housing troubles holding the state back.
“In the past, what has saved New Hampshire is the in-migration of people,” he said.
But that’s not happening in the aftermath of the housing bubble, financial collapse and recession.
“People are not able to sell their houses and relocate,” Preece said.
The Federal Reserve analysis concluded New England “is nearing its sixth straight year of home prices declines,” with Massachusetts and Vermont the only New England states showing year-over-year growth in the final quarter of last year.