Publisher's Note: Bank locally
Some economists and the national media are sounding the alarms that a recession could be around the corner. If a recession does come, it neednít hit us hard here in southern New Hampshire.
We have a couple of advantages.
The first is that our local economy hasnít been driven by home-building the way economies in Texas, California and Florida were and to some extent still are. For us, there arenít a lot of contractor jobs to lose. For those in the trades, New Hampshireís old housing stock still provides some remodeling opportunity.
Our second advantage is our proximity to Boston. While Boston may get hit a bit in a recession it is home to many recession-proof industries, including defense, education and medicine. Many of our commuters wonít be in jeopardy of losing their jobs.
Our third and final major advantage is our local banking. Unlike a lot of regions, we have numerous local credit unions, small local banks and small regional banks (as compared to Bank of America). The larger banks, such as CitiBank or Chase, have in large measure turned the lending spigot off. This means that even good businesses and good building projects wonít be able to get financing from them. This is what really leads to a recession. The lack of lending means businesses canít grow and canít hire new people. Itís this lack of liquidity that really turns a bump into a crash.
That said, itís important that local businesses continue to bank locally, so that the cash that they deposit can be lent out to businesses that might employ people who are their customers. If local businesses bank with Citizens, Bank of America or TD Banknorth their money is leaving the area. Local bank managers and even the local bank presidents of huge multi-national banks donít have the power to keep the lending spigot on. Losses up the line mean that all lending is curtailed.
This is not the case with local or regional banks or credit unions. The decision-makers for these lenders know their community and have the power to make decisions to go against the national trend.
Itís these banks that local business owners should be using ó not the big guys.
Hippo was one of those businesses that banked at one of the big banks because it was easy and across the street from our office. But after discussing the issue with a local accountant we switched to a regional bank because it better understood southern New Hampshire and because we knew that they were more likely to lend to our customers. This circular lending helps us.
And itís one of the key ways we in southern New Hampshire can keep any recession at bay. Your local bank will help keep your money in this area and that in turn will help your neighboring businesses get the money they need to keep growing or just keep afloat. Admittedly, there are other factors, but it will really help this region do better than other areas of the country.