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N H B R.C O M
COVER STORY As economy reopens, New Hampshire businesses enter uncharted territory BY BOB SANDERS
Midyear review
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hat if the economy closed and was almost immediately flooded with money? What if the unemployment rate rivaled that of the Great Depression, but consumers could spare more than a dime as many had almost as much cash as before? And what if, just as we were prepared to reopen, a lot of that money went away? Well, we’re finding out, and we’re about to find out even more as we watch economic history unfold. One minute New Hampshire’s economy was flowing and the next, after Gov. Chris Sununu issued emergency orders essentially shutting down entire industries, “it was like turning a faucet off,” said Larry Haynes, CEO of Bow-based Grappone Automotive Group. Economists still don’t know what to make of it. After the Covid-19 pandemic hit, “things have changed more rapidly than I’ve ever seen in my 50 years,” said Russ Thibeault, president of Applied Economic Research in Laconia. In the first week after New Hampshire’s stay-athome order took effect, more than 20,000 new unemployment claims were filed — 40 times the normal rate — and the number of claims kept going up to nearly twice that number at its peak. At deadline, the state was down to 6,000 new claims, still more than 10 times the normal rate. But that’s considered good news. Since the shutdown, the state’s unemployment rate jumped from 2.4% in March to 16.3% in April. By another metric, 111,000 jobs have been lost since last year. May’s rate hadn’t been released by deadline, but there is hope that, like the nation’s, it will go down. There has been some decline in continuing claims — a more reliable statistic now that the initial rush is over and some people are returning to work. At the end of May, continuing claims settled at slightly over 100,000, indicating an unemployment
rate of about 10.7%, though the official rate will probably be higher. The deputy commissioner of Employment Security put a positive spin on the drop, telling the Governor’s Economic Re-Opening Task Force that the numbers show 90% of the state is working. During the shutdown, people had money because, shortly after the economic collapse, federal dollars flowed into the Granite State, albeit with a few hiccups: Paycheck Protection Program, $1.5 billion; Economic Injury Disaster Relief loans and grants, $400 million; $1,200 individual stimulus checks, $900 million; Federal CARES Act flex funds, $1.25 billion; and enhanced unemployment benefits of $600 per week, $714 million.
$5 billion in federal funds flowed into the state — roughly one quarter of the quarterly gross state product And, thanks to that $600 extra benefit, individuals on unemployment collected, on average, nearly what they had been getting in wages. Throw in some smaller federal grants and it all adds up to $5 billion. That’s big money for our small state, roughly equivalent to a quarter of the quarterly gross state product. Unless Congress acts, it could all end. Enhanced unemployment benefits stop July 31. Most of the PPP money has already been spent. State taxes are due June 15, federal taxes a month later and
estimated federal tax payments are for the first six months. “If you pull the plug, that could change things. It would be very severe,” said Thibeault. And all this just when the economy reopens.
Manufacturing Of course, some parts of the economy never closed. All manufacturing was considered essential in New Hampshire, but some factories closed or slowed down production because of supply chain interruptions or diminished demand. All told, the state lost 6,400 manufacturing jobs in April compared to last year, or about a tenth of the previous workforce. Exports are up by 5% year to date, while nationwide they are down by nearly 10%, mostly due to a 20% April plummet. But not all exporters thrived. Boyle Energy Services & Technology Inc. in Merrimack doesn’t just ship but must travel to install its equipment to all parts of the world. It was operating at a quarter of last year. The company has been able to maintain its workforce because of PPP, “but there have been massive scheduling delays,” said CEO Michael Boyle. “Our money is in putting manpower around the world in 28 countries. We can’t get to Saudi Arabia, Brazil. Flights are three times as expensive. We are at the mercy of a global pandemic.” Others suffered a decline in domestic demand, like Wire Belt Company in America, a Londonderry firm that makes conveyers for Tyson and other food suppliers. At first, the restaurant shutdown was offset by increased grocery store demand, the company said, but then the virus struck meatpacking plants themselves, cutting revenue by 35%. Others, however, are growing. Vapotherm, which makes respiratory devices, is expanding its Exeter facility, enabling it to hire another 350 workers.
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