The U.S. and N.H. economies appear to be escaping high inflation without suffering through a recession. Despite substantially rising prices in the first half of 2022, prompting about a third of N.H. adults to report that it was somewhat or very difficult to afford usual household expenses, consumer spending continued to power the economy through the headwinds of price increases. Even as the ability of household savings to support economic activity has waned, particularly for lower income households, demand for goods and services continues to be strong.

Spending changes in response to the COVID-19 pandemic led to higher household savings overall, and particularly for upper-income households. The federal government’s robust response to the pandemic and support for the economy also bolstered the finances of households with lower incomes, providing financial support as inflation rose.

Poverty and food security

Data collected by the U.S. Census Bureau and released late last year showed the positive impacts of federal supports for the economy, particularly assistance targeted at households with lower incomes. Expansions to the Child Tax Credit, the Earned Income Tax Credit and the Child and Dependent Care Credit in 2021 pushed poverty rates down.

The expirations of these credit expansions after one year led to a rise in the national poverty rate that incorporates after-tax incomes. This measure of poverty increased from 7.8% to 12.4% in 2022 for all people, and from 5.2% to 12.4% for children, more than doubling the child poverty rate.

Despite a relatively low poverty rate in N.H., nearly 100,000 people still had incomes below the very limited federal poverty income thresholds, and poverty was more likely to impact certain populations and people living in rural counties. Granite Staters who are Black or African American, Hispanic or Latino, living with a disability or without a high school degree or an equivalent faced poverty rates of twice the statewide rate or higher during the 2018-2022 period. Poverty rates in Sullivan and Coos counties were nearly 12% during this time, while Rockingham County had a poverty rate of about 5%.

Nationwide, food insecurity rose in 2022 relative to 2021 and 2020. In N.H., the three-year average food insecurity rate from 2019-2021 was 5.4%, lower than the high rate of 10.2% during 2011-2013, in the immediate aftermath of the Great Recession. This lower rate shows the success of targeted assistance and a pre-pandemic economy that boosted lower-wage worker pay. However, early signs from the 2022 data suggest food insecurity, like poverty, may be increasing.

The state’s population and the role of migration

While the labor shortage in N.H. appears to have eased some during the second half of 2023, there were still more than two jobs open per unemployed worker actively seeking work.

New Hampshire has historically relied on population growth to support its labor force and economic expansion. Population growth in the 1970s and 1980s averaged more than 18,000 people per year but slowed in the 1990s and dropped to approximately 6,100 per year during the 2010s.

The pandemic and associated remote work opportunities have boosted N.H.’s population. The annual average population increase from April 2020 to July 2023 was about 7,500, according to data released in December. However, N.H. had approximately 6,600 more deaths than births during this period, which continues a long-term, pre-pandemic trend.

This imbalance means N.H. relies on domestic and international in-migration for population growth. International migration alone accounted for more than half of N.H.’s population growth between 2010 and 2023, and the state has become more racially and ethnically diverse.

The limited and expensive housing opportunities for people considering relocating to N.H., however, create a challenge in an era when deaths outnumber births.

While N.H.’s population has grown by about 24,500 residents (1.8%) since April 2020, Maine has grown faster, with 32,500 residents (2.4%) added to the population. Data from 2021 and 2022 indicate about 6,500 more people moved from N.H. to Maine than moved in the other direction.

The population trends associated with the pandemic may also be more fleeting than previously considered. Between 2022 and 2023, bolstered by both international migration and having more births than deaths, Massachusetts became the second-fastest growing state in New England, behind only Maine in its growth rate.

Investments in the labor force

In total, these new data point to the potential for a slower economy in the near future. New Hampshire’s workforce shortage, however, is unlikely to ease quickly. Demographic changes and housing constraints suggest the state will be increasingly reliant on a relatively small inflow of migrants for population growth.

Investments in economically marginalized individuals and communities in N.H., including Granite Staters in poverty, may help keep economic growth in the state strong while enhancing labor force engagement.