First published in New Hampshire Business Review, January 12, 2024
The national economy outpaced many forecasters’ expectations for a recession in 2023. As recently as July, the U.S. Congressional Budget Office projected that inflation-adjusted national Gross Domestic Product growth would be an annualized 1.4% and 0.6% in the second and third quarters of the year, respectively. Economic growth surpassed those estimates, rising 2.1% and 4.9% in those quarters.
However, New Hampshire’s economic growth stalled during the last two years. After rebounding faster from the pandemic than national GDP in 2021, New Hampshire’s gross state product has made little progress.
Newly released data for the third quarter of 2023 in New Hampshire show faster growth, but total gross state product was only 1% higher than the third quarter of 2021, after adjusting for inflation.
A contributing factor for New Hampshire’s lagging growth has been labor force limitations. The monthly average number of New Hampshire residents working or looking for work from January to November 2023 was about 3,300 (0.4%) lower than in 2022, and 17,100 (2.2%) lower than in 2019. For the first 10 months of 2023, there were slightly less than an average of three job openings per unemployed worker seeking a job in the state, substantially above 2019 levels.
Key reasons for workforce constraints will persist in 2024.
The state is an estimated 23,500 housing units short of meeting demand. An average of about 16,000 Granite State adults were out of the workforce because they were caring for a child not in school or child care during the 12 months ending October 2023. While migration from other states has increased since 2019, international migrants, who accounted for about half of the state’s total population growth from 2010 to 2022, appear to be arriving in smaller numbers. More baby boomers, the state’s most populous generation, are retiring.
The economy faces some new challenges in 2024. As household savings that were built up during the COVID-19 pandemic continue to be depleted, the economy will likely slow as consumer spending becomes more limited and families struggle more to pay their bills. International relations and domestic policy choices could disrupt the economy, such as through energy price increases or a federal government shutdown.
While external headwinds may jostle the state’s economy, the underlying challenges of limited access to housing, child care and other resources families need to thrive will likely continue to be key constraints on the well-being of Granite Staters and the economy.
Phil Sletten is research director for the NH Fiscal Policy Institute. The NHFPI Policy Memo is a partnership of the NH Fiscal Policy Institute and NH Business Review.