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Forecast: 2016 'going to be a good year for New Hampshire economy'

By DAVE SOLOMON
New Hampshire Union Leader

September 29. 2015 11:32PM




MANCHESTER — The state’s economy is poised for continued growth in 2016, driven largely by the housing market and lower energy prices, according to the state’s leading economists.

“This (2016) is going to be a good year for the New Hampshire economy, with strong employment growth, continued growth in the housing sector and lower energy prices overall,” said Dennis Delay, an economist with the New Hampshire Center for Public Policy Studies.

Delay joined economist Connor Lokar, from ITR Economics of Manchester, for the annual Economic Forecast hosted by the Greater Manchester Chamber of Commerce on Tuesday at the Derryfield Country Club.

Both men were decidedly bullish on the state’s economic prospects for the year ahead, with a few caveats, mostly surrounding the lack of immigration into the state and outdated land-use and housing policies.

According to Lokar, analysis by ITR suggests that the New Hampshire economy, which grew by 2.3 percent in 2014, will follow a national pattern, growing at a slower rate in the second half of 2015 and into the first half of 2016, before picking up again.

“We are not projecting any kind of recession,” he said, “but signs are that the U.S. economy will experience a slower rate of growth through the rest of this year and into early 2016. Momentum will pick up in the middle of 2016 and into 2017.”

Lokar said economists are expecting two and half to three years of economic growth before the possibility of a mild recession in 2019.

Delay said he expects employment in New Hampshire to grow at the fastest rate since the Great Recession, particularly if gasoline prices stay low.

“Two dollars a gallon for gas is a turning point,” he said. “That’s when people start to think they have more money to spend, so low energy prices are always good news for New Hampshire. We’ve already heard from most of the major electric utilities that they expect winter rates to be lower than the previous winter, and significantly lower than the winter before that.”

The major difference between this economic recovery and those of the past is the lack of in-migration. In the three decades from 1970 to 2000, New Hampshire saw annual population growth in the 20 percent range, with most of the in-migration coming from Massachusetts.

That trend has stalled, perhaps indefinitely. Population growth is projected to slow to 3.3 percent per year by 2020 unless the state takes steps to reverse the trend.

The state should be encouraging immigration and an overhaul of outdated land-use and zoning policies, according to Delay.

“The immigrant population in New Hampshire really helps solve labor market shortages at both the low end and in the high end,” he said. “A lot of the political discourse is being driven by a fundamentally wrong idea of how the economy works.”

Lokar agreed that immigration is key to the state’s economic future. “Demographics are not really working in New Hampshire’s favor,” he said. “Immigration is going to be the only way for us to overcome our anemic population growth.”

That means municipalities in the state are going to have to let go of zoning and land-use ordinances that were designed to control in-migration when population growth was actually a problem for many communities.

“We have a set of zoning, planning board and land-use ordinances that were designed to cope with population growth of 10,000 to 20,000 a year, but ill-serve the New Hampshire of today,” Delay said. “There has to be a serious look at housing policy and its impact on economic development.”

dsolomon@unionleader.com


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