Economic challenges remain, but analysts at Nashua Chamber event say they’re optimistic
NASHUA – Three days after President Barack Obama delivered his State of the Union address, local economic analysts shared their state of the region response Friday at a Greater Nashua Chamber of Commerce luncheon.
They agreed the region is growing stronger, although challenges remain, including a retirement system that threatens to bankrupt the state and a housing market struggling to recover.
Now three years into the recession, employment rates, bank lending and overall spending levels are improving slowly, state and regional analysts told business leaders gathered at the Holiday Inn on Northeastern Boulevard.
These numbers haven’t yet returned to pre-recession levels, Katherine Bradbury, senior economist for the Federal Reserve Bank in Boston, told the crowd. But they’ve increased over the last year and are likely to continue to rise through this year, Bradbury said.
“The outlook may be disappointing, but it’s still positive,” she said. “We can expect gradual progress on employment, unemployment, housing market and overall economic activity.”
Throughout the recession, which started in fall 2008, New England and particularly New Hampshire have fared better than the rest of the country, Bradbury said.
At its lowest point, the country had lost 13 million jobs, 8.5 percent of the total job count. New England, by comparison, lost about 560,000 – about 7 percent of the job pool.
These employment numbers have been rising slowly but steadily over the last two years, Bradbury said, gaining about 1 percent annually across the country and around New England.
Last month, New Hampshire’s unemployment rate dropped to 5.1 percent, more than 3 percent lower than the national average of 8.5 percent, according to numbers released last week by the state Department of Employment Security.
State and national unemployment figures dropped over the last year, and analysts expect them to continue to slide this year.
Unemployment numbers aren’t the best measure of employment because they don’t take into account people who have been out of work for extended periods and who haven’t been looking for jobs, Bradbury said.
“The number of discouraged and marginally attached workers has risen,” she said.
In New Hampshire, other signs of recovery are showing, as well.
Last year, state banks combined to provide more than $150 million in loans to small businesses, more than before the recession, said Ed Caron, executive vice president for Merrimack County Savings Bank.
“We’re really active, and we’ll continue to do some good projects in town,” Caron said.
Further, the state’s business taxes, typically considered one of New Hampshire’s most volatile revenue sources, increased last year, said Charles Arlinghaus, president of the Josiah Bartlett Center for Public Policy.
“Things are coming back,” he said. “Our most volatile tax source is starting to return to form.”
Not all is right in the state, however.
Despite the progress, the state Retirement System, which promises more benefits than the state can afford, remains an albatross that threatens to bankrupt the state, Arlinghaus said.
And the local housing market, like others around the country, is still years away from returning to form, Caron said.
Housing values are still falling, foreclosures are still high, and the rates of sales and new construction have fallen sharply, stifling the building industry, among others, the analysts said.
When no one is building houses, construction workers find less work, and retail and home goods sales suffer, as well, they said.
“We don’t have the confidence to (build or buy houses) right now,” Caron said. “The bottom line is we still have three, five, six years to go before the housing market really dramatically improves”
Nevertheless, analysts and business leaders alike see reasons for optimism in the year to come, they said Friday.
The gains in employment rates and spending will soon reach small businesses and retail shops, many of which are continuing to struggle, said Chris Williams, president of the Nashua Chamber.
“We’re definitely seeing some positive signs. Things are coming to life,” Williams said, pointing to the recent redevelopment of Indian Head Plaza in the city.
“We were very fortunate to have a very strong 2011, and 2012 is looking just as good,” Robert Prunier, executive vice president of Harvey Construction in Bedford, said as the event concluded. “It might not come as fast as we want, but there are reasons to feel good.”
Jake Berry can be reached at 594-6402 or email@example.com.