New Hampshire entered the Great Recession in 2008 with approximately 650,000 non-farm jobs.
By the time the recession ended 18 months later, the state had lost 25,000 of those jobs, and it has been struggling to recover them ever since.
As of August, the number was at 643,000, and it is on pace to hit 650,000 by May of next year, according to the annual forecast of the New England Economic Partnership presented on Wednesday at the Federal Reserve Bank in Boston.
New Hampshire will most likely be the third state in New England to recover the jobs lost in the recession, trailing Massachusetts and Vermont, both of which are already back to pre-recession levels, said economist Dennis Delay.
Delay presented a summary of the partnership's report on New Hampshire in a conference call with reporters.
"Usually we've been the leader in economic growth and job growth among the six New England states, and oftentimes among most of the states on the Eastern seaboard, but that's not the case this time," said Delay, an economist with the New Hampshire Center for Policy Studies in Concord. The unemployment rate in the state is expected to average 5.3 percent this year, 4.5 percent at the end of 2014, and 3.9 percent by the end of 2015. "It will take us a while to get back to that 3.5 percent that we saw in 2007 and 2006," he said. "We won't see that until 2016."
The slow but steady improvement in New Hampshire is in stark contrast to the state's rapid and far more robust recovery from past recessions, when job growth was also marked by population growth, particularly in the southern part of the state.
"A lot of that growth came from high-tech companies from Massachusetts moving up here and expanding," Delay said. "The story is very different now, and that has profound implications for how New Hampshire looks at itself."
The robust economy in the Greater Boston area is once again the shining star in the regional recovery, Delay said, thanks to growth in the financial services, high-technology and health-care sectors. In past years, a growing economy and rising housing prices in the Boston area triggered a boom in Southern New Hampshire, but this time is different.
"Some of what used to be the flight from metropolitan Boston is reversing now," Delay said. "A lot of the towns around metro Boston are growing fairly quickly. There is also significant international migration into Massachusetts. The real estate market in Greater Boston is pretty hot right now."
Boston area professionals are not flocking to Southern New Hampshire as they did in past periods of economic growth, and Delay was at a loss for an explanation. "I wish I had the answer, but I don't," he said.
He speculated that a number of factors are at work. The current population of young adults is much smaller than the population of baby boomers. "There are simply fewer young people," he said, "and they are the ones most likely to be moving and forming households."
They also have a very different outlook. They are less likely to start a household until much later in life, are often drawn to urban environments as opposed to suburbia, and are more skeptical about the value of home ownership versus renting, having witnessed historic declines in home prices.
"We had a focus group of young professionals for the Stay, Work and Play organization," said Delay, "and we were surprised at how people in their 20s and 30s are solving the problem of where to live. They are much more cautious about home ownership and are much more concerned about keeping their options open."
The trends suggest that the Granite State will have to develop a more self-reliant path to growth, and will not benefit from the Massachusetts economy to the same degree as in the recent past.
"We simply can't rely on offering a lower-cost alternative to Boston," Delay said. "It's probably time to rethink how we approach economic strategies in New Hampshire."