Sunday, June 19, 2011

Can New Hampshire afford to be last in economic growth?

In a recent Union Leader op-ed, Charlie Arlinghaus points out that New Hampshire, according to the latest BEA statistics, is last in economic growth in New England. Due to other data, he is "cautiously optimistic", but he argues that the low growth numbers should be interpreted as a warning sign by state policymakers.

Feeling warned, I took a closer look at the numbers. They do appear a little alarming, with New Hampshire in low-growth brown surrounded by states in high-growth blue (or at least middling white):

But what kind of warning is this?

Fortunately, the BEA provides detailed data on the contribution of different sectors to economic growth, so we can see exactly what's going on.

Browsing through their Excel file, it's clear that the housing sector is driving most of the difference. Here are the growth rates with housing excluded:

ME - 2.2%
CT - 2.9
NH - 2.9
RI - 2.9
VT - 3.0
MA - 3.6

To the extent that there is a warning, it's mostly about housing. Perhaps this is related to property taxes?

Of course, the difference could also be caused by factors unrelated to government policy, so we should interpret this data cautiously.

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