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NH's economy growing faster than regional average

By Norma Love
Associated Press / November 17, 2011

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CONCORD, N.H.—New Hampshire's economy is growing faster than the regional average but is in danger of stalling due to not enough jobs being created, according to a forecast released Thursday by the New England Economic Partnership.

Economist Dennis Delay, the partnership's New Hampshire forecast manager, gave that assessment to reporters as a preview of the organization's fall conference Friday in Manchester.

"This is an economy on thin ice and all of the things that go along with that metaphor," said Delay. "The economy seems to have hit a stall speed both locally and nationally."

Delay said New Hampshire's unemployment was little improved last summer and that any acceleration in private-sector job creation appears to be partially offset by public sector job losses. New Hampshire's rate in October was 5.3 percent.

"We're still adding jobs, just not as fast as we did in the summer," he said. He estimates job grown in 2012 will be less than this year, creating the risk for a recession.

Delay projects that at the current growth rate, New Hampshire will have regained all the jobs lost in the recession by the second quarter of 2013. He said problems for the state's economy include government job cuts acting as a drag on the economy and poor real estate sales.

Before the recession, New Hampshire was on track to have 680,000 jobs now, but only has 630,000, said Delay.

"We've lost a potential for 50,000 jobs in the New Hampshire economy. We don't expect to get back to that level of jobs in the state until well beyond 2015."

Delay estimated 2,000 government jobs would be lost from 2010 to 2012. He said the weakest sector is construction, hurt largely by a weak real estate market.

Delay said he does not expect to see much of a recovery in the real estate market soon. He said prices seen now are 20 percent lower than in 2004 and 2005 probably won't reach those levels again until well beyond 2015. The median home price in September was $217,000 -- 5.5 percent below the price for the same nine months in 2010.

Ross Gittell, partnership vice president and New England forecast manager, said Delay's "thin ice" metaphor for New Hampshire's economy holds true for the nation and the rest of New England. Gittell, an economist and University of New Hampshire professor, said that is due to conditions beyond U.S. control, such as the European debt crisis.

"We're really looking at a continued period of economic stagnation," he said.

Gittell said New Hampshire is expected to be one of the strongest performing New England states. Massachusetts and Vermont also are expected to do well. He said Connecticut's economy is predicted to be the weakest in the region because of its proximity to the New York financial markets and Wall Street. Maine also is expected to experience low growth, and Rhode Island will have high unemployment for some time because it suffered most of the states during the recession, he said.

Gittell said forecasters believe Rhode Island's unemployment rate will be about 8 percent in 2015; it's currently 10.5 percent.

He said most economists believe a 1 percent growth in employment is needed just to keep unemployment at existing levels. He said the region's rate is about half that, which means the economy is stagnant.