The unstoppable New Hampshire economy of the post-COVID years is running into economic headwinds of higher unemployment and inflation, a nonpartisan economic research firm said in late August.
No definitive evidence points to a recession, the New Hampshire Fiscal Policy Institute said in an economic issues brief.
But the state may be at an inflection point, the institute said.
“Inflation remains elevated, employment appears to have weakened substantially in New Hampshire and nationally, and Granite Staters still face higher costs for living essentials, such as housing and caregiving needs. New Hampshire’s economy appears to have been hit with substantial headwinds,” the brief concludes.
The findings show not all bad tidings for the state’s economy, which comprises 8% of the New England economy, the third largest in the six-state region.
New Hampshire saw the number of people in its workforce — which entails both employed workers and people actively seeking jobs — grow by 1.3% in 2024, the fastest rate in six years.
And inflation-adjusted median wages rose from 2023 to 2024 in most of the state, and by hefty percentages in Sullivan, Strafford and Rockingham counties.
Yet, in economics one optimistic observation can be offset by another.
For example, while the workforce grew, so did unemployment during the first half of 2025. In fact, the unemployment rate in New Hampshire recently topped 3% for the first time in almost 10 years, except for the blip during the COVID-19 pandemic.
Job losses fell heavily in the hotel, restaurant, retail, arts and recreation sectors, more than offsetting gains in health care and private education.
The year started slowly at Flag Hill Distillery & Winery in Lee, which offers locally produced wine and spirits, a wedding venue, overnight stays and catering.
“While the first half of the year was quite a bit slower than prior years, it does seem with the last three or months of data, we think that corner has turned. Our June, July, August was actually better than last year across the board,” said Brian Ferguson, owner of Flag Hill.
When he speaks to restaurant owners, most tell them they have had a strong summer, said Ferguson, who is chairman of the board of the New Hampshire Lodging and Restaurant Association.
He said macroeconomic factors seemed to play a part in the strong summer. Early in the year, there was a lot of uncertainty in the national economy. But as the summer arrived, interest rates dropped some, inflation tamed and the stock market took off.
“This summer has felt very normal, where this winter did not feel normal,” he said.
He also said it’s been the easiest to find workers since 2020.
Inflation played a role in the analysis by the Fiscal Policy Institute. It showed inflation canceling out wage increases that a worker may get from a raise or more hours.
The institute reported that inflation-adjusted, private-sector New Hampshire wages fell in two of the last three years and by 2% in the first seven months of 2025.
“While inflation is more limited than it was in 2022, it has remained elevated relative to before the COVID-19 pandemic. When the cost of goods and services increases faster than income growth for households, the real spending power of individuals and families decreases,” the brief reads.
Inflation has also hit the state differently.
Inflation-adjusted wages actually fell in the state’s largest county, Hillsborough County, from 2023 to 2024, and they either had no change or rose less than 1% in Belknap, Merrimack and Cheshire counties.
One factor pushing up prices is tariffs. Analysts estimate the average person will pay an additional $2,700 in 2026 due to tariffs, with the burden likely falling most heavily on lower-income households.
The Institute said the state continues to face long-run constraints that have held back the economy for years: a lack of affordable housing, costly childcare and an aging population.
“With the broader economy at a potential inflection point, some of these challenges may ease while others could become more severe,” the brief reads.
The brief cautions that much of the data used in its analysis is preliminary and may be subject to revision.
The unstoppable New Hampshire economy of the post-COVID years is running into economic headwinds of higher unemployment and inflation, a nonpartisan economic research firm said in late August. No definitive evidence points to a recession, the New Hampshire Fiscal Policy Institute said in an economic issues brief.
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