N.H. Harbors Air of Unease Despite Healthy Economy

Four years ago, when he set out to win reelection, President Bush was greeted on the campaign trail by the bleak scenery of New Hampshire, 1992 model.

The distant hills were crusted with snow, as they are now, offering an inviting tableau of New England in winter. But for Bush--and, most important, for voters--the lasting political impression was up close and ugly: strip malls darkened by recession; cascading reports of factories, offices and banks closing; a 21% drop in housing prices in two years, and a frightening climb in unemployment.

Now look at New Hampshire, the 1996 model, and the political message it is broadcasting south and west: Jobs are back, incomes are up, unemployment is at 3.2% and Gov. Steve Merrill is crowing that his is “one of the most livable states in the nation.”

Yet here as elsewhere in the country in this election year, the bullish air is tempered by a sense of unease and anxiety about the personal costs of this recovery and the future it heralds for America.

In 1992, at a stop in Exeter, Bush’s frustrated response to the deep economic concerns--”Message: I care”--served only to fuel the despair and symbolize his failure to respond more forcefully and rapidly.

Today, the angry mood that was smeared starkly across the political canvas of New Hampshire’s primary election--and from there across the landscape of the presidential campaign--is gone. The jobs that were lost in the recession that helped drive Bush from office have returned, at least in total numbers. The housing market that was once in free fall has stabilized. Unemployment is low enough that bankers are worrying that competition for workers will drive up wage rates and overheat the economy. No banks have closed since 1992.

Average annual income in 1994, the most recent year for which figures are available, was $23,680, nearly $200 greater than the U.S. average and the eighth highest in the nation, up 6.1% over 1993.

The New Hampshire economy?

“Wonderful. The whole state is doing well,” said Richard Pollard, vice chairman of Bay Bank Inc. of Boston, which has just purchased two New Hampshire banks and is itself in the process of being acquired by the Bank of Boston.

Not the Same Gains

Nonetheless, that recovery and Pollard’s optimism notwithstanding, an undercurrent of unease and dissatisfaction remains--an undercurrent that could yet mean trouble for President Clinton, who used the economic problems of 1992 as the focus of his campaign.

No one quite illustrates the unease of 1996 like Carol Welch.

Don’t talk to her about the future of international trade, about the ringing world of the telecommunications revolution.

Over 17 years she worked her way up at Northern Telecom until she was earning $45,000 a year as a manager in international marketing. Now, at 53, she’s grateful to be ringing up sales for $9.08 an hour--about $17,500 a year--at the cash register at the L.L. Bean Factory Store off Interstate 93 in Concord.

Northern Telecom moved its communication equipment operation out of state at the end of the 1980s, taking 450 jobs with it. The defense firm she latched onto closed its doors in 1992. Finally, after sending out “hundreds of resumes and trying for jobs I was more than qualified for,” she became one of Bean’s first hires when it opened its store in 1994.

New Hampshire, which once boasted the largest cotton mills in the world, is completing the transition from manufacturing. As the state embraces the Information Age, as it makes less footwear and more software, reams of government data tell the story of thousands of Carol Welches: Yes, the jobs lost in the recession are nearly back. But they are not the same jobs.

“We’ve added jobs at the same pace as the go-go ‘80s, but the income growth is only half as great,” said Russell Thibeault, president of Applied Economic Research, an economic consulting firm in Laconia. “In general we’ve gained back all the jobs we lost, but they pay $375 a week in retail and service industries. The jobs lost were in manufacturing and construction, paying an average of $625 a week.”

“In ‘91, the state was on its butt. . . . It was right there and Bush did miss it,” he said. “That’s not the case now. We’re better off than we were four years ago, but it’s been a recovery without prosperity.”

Uncertainties in ’96

That line encapsulates the concerns of Sue Hillhouse, Debbie Schmid and Catherine Houghton.

Hillhouse opened Sue’s Barber Shop and Salon on the first floor of her home on South Mast Road in Goffstown in 1991, and eventually had three people working for her. Schmid thought the savings she and her husband had accumulated from their banking jobs in Washington, D.C., and Florida over the past 20 years would allow them to retire in southern New Hampshire. And Houghton figured on catering to a lunch crowd of stay-at-home mothers in the crossroads town of New Boston when she expanded the bakery she bought nearly eight years ago into a cafe.

But each, while not suffering the economic hardships of their communities in 1992, is adjusting to the uncertain realities of 1996.

Hillhouse is now working by herself, 60 hours a week. Her shop is generally taking in as much business as it did when she had three employees, she says, but she is keeping all the income, rather than sharing it with workers--and, importantly, she complains, paying a share of their taxes.

“I enjoy it more now. I love doing hair. I don’t think that I’d ever get out of it,” said Hillhouse, 31.

But as content as she is, she insists “the economy’s in no better shape” than it was four years ago.

Schmid, 43, and her husband moved to Weare from a community outside Palm Beach, Fla., five years ago. Her overriding concern is taxes: She and her husband are paying $4,200 a year in property taxes--New Hampshire has no state income or sales tax--on a three-bedroom, 1,800-square-foot ranch home on “less than two acres.” They paid $125,000 for it; now she fears it would bring no more than $100,000.

It was high taxes, she said, that forced her back into the job market.

Now she and her husband are thinking about trying to cut their costs more by putting their house up for rent and moving to Dixville Notch on the Canadian border, “where all you have is the balsams.” In her first career, she had risen to branch manager and operations officer; now she is a teller supervisor at a branch in a mini-mall outside South Weare.

When Houghton, a transplant to New Hampshire from Connecticut and before that, Larchmont, N.Y., bought the bakery, “pastry sold like wildfire.”

Now, she says, “the town has changed.”

“It’s a bedroom community, deserted from 8:30 to 5:30,” she said, and to make money, the cafe must stay open for dinner. That, she says, would mean too much work to do alone, and she doesn’t want to delegate. So she is selling the cafe and planning to build a wholesale baking business.

But even as she speaks optimistically about her own business, she says: “I am very, very depressed about the economy, and I’m extremely disillusioned about this state. Come to New Hampshire because it is the state of opportunity? Do not!”

Welch routinely sees former colleagues who have been forced to scale back. And working beside her, at $9.08 an hour, is a veteran department store manager, as well as recent high school graduates.

As for the economy, she said, “it’s leveled off.”

“People,” she said, “have learned to readjust and live with what they have.”

Economic Insecurity

These concerns make up the almost-hidden base of the political landscape. Overall questions about the economy are lost as candidates for the Republican presidential nomination focus more on narrower issues.

Indeed, says Linda Fowler, director of the Rockefeller Center for the Social Sciences at Dartmouth College, 82% of likely Republican voters “tell us they think the economy needs more attention” from the candidates.

Patrick J. Buchanan, who was also a candidate in 1992, is saying that the economic insecurity of the middle class remains the central issue. “People have jobs, but there is a real fear the factory that is there today won’t be there tomorrow,” he told reporters in Manchester recently.

Still, Fowler said, four years after the conservative commentator’s showing in the New Hampshire primary--37% to Bush’s 53%--signaled that the president was vulnerable, “Buchanan has just not struck the same chord with his economic populism.”

As they look back at 1992, former Bush aides recognize how critical the state turned out to be in magnifying the nation’s problems and fears.

The irony is that the national recession had ended by the time the votes were cast in November 1992. The national economy was growing strongly, New Hampshire had already hit bottom and “we were in the process of climbing out,” said Ashton Welch, Carol Welch’s husband and executive vice president of the New Hampshire Assn. of Realtors.

For Bush, there were two problems, said campaign pollster Fred Steeper: “the state of the economy, and the perception the president didn’t pay attention to it.”

Bush’s expression of concern that day in Exeter, Steeper said, “was the right message, but too late. It rang hollow.”

As for today, says Walter Warren, executive director of the Greater Nashua Center for Economic Development, “it’s hard to inspire confidence in the economic recovery. People are looking more skeptically at economic policy and the solutions that are being offered. The confidence level is low, and slow to evolve.”

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Vital Signs

The economy of New Hampshire, as measured by unemployment and earning statistics, has improved markedly since the 1992 presidential primary election. But housing prices has still recovering.

Jobless rates

Note: Seasonally adjusted; rates taken in December

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Single family home

1990: $138,302

1991: $132,123

1992: $109,253

1993: $110,858

1994: $110,053

1995: $113,055

Note: Average sales price

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Per Capita Income

Note: U.S. Average, 1994: $21,699

Sources: U.S. Commerce Department, Bureau of Economic Analysis