New Hampshire - Economy

Economy

The Bureau of Economic Analysis estimates that New Hampshire's total state product in 2008 was $60 billion, ranking 40th in the United States. Median household income in 2008 was $49,467, the seventh highest in the country. Its agricultural outputs are dairy products, nursery stock, cattle, apples and eggs. Its industrial outputs are machinery, electric equipment, rubber and plastic products and tourism.

New Hampshire experienced a significant shift in its economic base during the last century. Historically, the base was composed of the traditional New England manufactures of textiles, shoe making, and small machining shops drawing upon low-wage labor from nearby small farms and from parts of Quebec. Today, these sectors contribute only 2% for textiles, 2% for leather goods, and 9% for machining of the state's total manufacturing dollar value (Source: U.S. Economic Census for 1997, Manufacturing, New Hampshire). They experienced a sharp decline due to obsolete plants and the lure of cheaper wages in the South.

The state's budget in FY2008 was $5.11 billion, including $1.48 billion in federal funds. The issue of taxation is controversial in New Hampshire, which has a property tax (subject to municipal control) but no broad sales tax or income tax. The state does have narrower taxes on meals, lodging, vehicles, business and investment income, and tolls on state roads.

According to the Energy Information Administration, New Hampshire's energy consumption and per capita energy consumption are among the lowest in the country. The Seabrook Station Nuclear Power Plant, located near Portsmouth, is the largest nuclear reactor in New England and provides about 30 percent of New Hampshire’s electricity. Two natural gas-fired plants and some fossil-fuel powered plants, including the coal-fired Merrimack Station plant in Bow, provide most of the rest.

New Hampshire’s residential electricity use is low compared with the national average, in part because demand for air conditioning is low during the generally mild summer months and because few households use electricity as their primary energy source for home heating. Over half of New Hampshire households use fuel oil for winter heating. New Hampshire has potential for renewable energies like wind power, hydroelectricity, and wood fuel.

The state has no general sales tax and no personal state income tax (the state does tax, at a 5 percent rate, income from dividends and interest) and the legislature has exercised fiscal restraint. Efforts to diversify the state's general economy have been ongoing.

Additionally, New Hampshire's lack of a broad-based tax system (aside from the controversial statewide property tax) has resulted in the state's local communities having some of the nation's highest property taxes. Overall, New Hampshire remains ranked 49th among states in combined average state and local tax burden.

As of February 2010, the state's unemployment rate was 7.1%. By October 2010, the unemployment rate dropped to 5.4%.