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If pundits are looking for more evidence that partisanship is the most important motivator in American politics, New Hampshire just added another data point:

In November, the Granite State economy hit a record for the number of employed residents and a 30-year low unemployment rate…and voters threw out the Republican House and Senate and gave the incumbent GOP governor just 53 percent of the popular vote.

On Wednesday, the new jobs report revealed the highest number of working state residents ever– 763,040– and unemployment down to 2.5 percent, the lowest since August, 1988.  “Thanks to the strategic initiatives that New Hampshire has made, and our pro-growth, pro-jobs focus, more Granite Staters are working than ever before in the state’s history,” Gov. Chris Sununu said in a statement. It’s the same argument he made during the 2018 campaign, and one that his challenger, Molly Kelly, famously had no answer to.

???? BREAKING: For the first time since 1988, New Hampshire’s unemployment rate hits a low 2.5%. Well below the national average, it’s clear that we continue to set the gold standard for the rest of the country. WE ARE OPEN FOR BUSINESS! pic.twitter.com/9CorvNGZJf

— Chris Sununu (@GovChrisSununu) December 18, 2018

“Today’s economic news continues the positive trends of the past few years relating to the labor force; demographics; migration; exports; unemployment, and capital investment,” said Taylor Caswell, commissioner of the Department of Business and Economic Affairs. “We can say with confidence that New Hampshire’s economy remains highly competitive and will continue to attract top talent and world class employers.”

All great news. No, not great: Spectacular.  And yet, the fourth-most popular governor in the country with a red-hot economy and an unimpressive opponent won an 8-point win.  If “The Economy, Stupid” rules were in effect, this wouldn’t happen.

The same with President Donald Trump. Setting aside the stock market’s end-of-year “polar bear plunge,” the Trump economy has been unbelievably strong–literally. Pundits predicted economic disaster from a Trump presidency and dismissed Trump’s talk of 3 percent (and higher) growth as unrealistic.  The growth rate in the last quarter? 3.5 percent. The quarter before that: 4.2 percent.  And the national jobs numbers are just as hot: 3.7 percent unemployment, record-high employment among minority workers and the highest annual increase in wages in nine years.

And where’s Trump’s approval rating? 43 percent approve, 52 percent disapprove.

This is the environment New Hampshire Republicans must navigate, one where partisan animus overwhelms actual pocketbook performance.  Social scientists continue to be astonished by this new American moment, when the best predictor of behavior isn’t race or sex or economic standing–but partisanship.  That’s not how America has worked in the past.  The Republicans who crossed over and voted for Bill Clinton in 1996, the Democrats who stuck with George W. Bush in 2004 over national-security issues–they’re gone.  They’ve been replaced by a growing number of voters who simply vote party without seriously considering candidates from across the aisle.

Which means that, for Gov. Sununu and the Republicans who hope to re-take the state legislature or offer a serious challenge to congressional Democrats, delivering results and recruiting strong candidates isn’t enough. They have to find a way to shift voter’s views of the GOP brand here in New Hampshire.

And that’s another reason why the NHGOP’s choice of a new chairman is so important.  Creating a Granite State-friendly GOP brand is vital. Unfortunately, in a Trump-dominated political environment, it may next to impossible.

Baseball fans love to argue who has the strongest team, the best pitching, and fiercest lineup. And they make their case by using stats: winning record, ERA, batting average.

At the State House, many of the players say they’ll support legislation that promotes a healthy climate for job creation and a strong New Hampshire economy. Because businesses are the number one payer of state taxes, legislators often say they’ll get behind efforts that help businesses thrive. But when they finally get their turn at the plate, some just leave the bat on their shoulder and watch pitches go by.

BIA recently published its fourteenth annual Legislative Scorecard and fifth annual Victories & Defeats for New Hampshire Businesses. (Access the publication on our website, BIAofNH.com.) The companion pieces track how all Senators and House members voted on legislation of keen interest to the business community and summarizes the outcome of a wide variety of bills in a mix of policy areas.

The Scorecard section is easy to follow. Individual scores are based on roll call votes only (those in which lawmakers’ votes are recorded by the clerk), not up-or-down voice votes in which a Senator’s or Representative’s position is difficult, if not impossible, to identify. Selected legislation (ten bills for the Senate, eleven bills in the House) covers a variety of issue areas.

BIA is a nonpartisan advocate for our members – leading employers in every corner of the state. Business-friendly legislation sometimes falls on the political left and sometimes falls on the political right. Not everyone agrees with BIA on every vote; however, 141 Senators and Representatives – both democrats and republicans – scored high enough to warrant special recognition.

Those scoring between 86-100% on selected legislation received the honor, “Champion of Business.” Those who scored between 70-85% are recognized as “Friend of Business.” If you meet a state legislator running for re-election over the next few weeks, ask them what their BIA Scorecard percentage was (or look it up yourself online).

While the Scorecard is intended to hold legislators accountable for their response to business issues, the Victories & Defeats portion of the publication reports on the legislature’s efforts to enhance New Hampshire’s climate for job creation. By extension, the publication is a reflection of BIA’s efforts to influence public policy. As New Hampshire’s leading business advocate, our members expect us to communicate their concerns to elected officials. No one bats a thousand, but looking back at the 2018 session, BIA did well.

For example, in the area of employment law, we flashed some Gold Glove-caliber defense on a flurry of bills that would have allowed state government to intrude on private business decisions in everything from hiring practices to scheduling to benefits administration. We think employers know better than politicians how to run their businesses. Most lawmakers agreed with us, and all bills of this type, which are listed in the document, were defeated.

Another area where legislators heard us was on environmental policy. Most thoughtful business leaders agree the issue of emerging contaminants, such as PFOS and PFOA, should be taken seriously and thoughtfully addressed. Throughout the 2018 session however, we saw an overreaction to this issue. Although modern technology can now detect the presence of chemicals at increasingly smaller concentrations (parts-per-trillion), science around health impacts of smaller concentrations is lagging.

We saw lawmakers attempt to address this conundrum by tasking the state to do something the federal government’s Environmental Protection Agency, academia, and industry scientists have yet to do: establish new standards for a cornucopia of compounds in the air, groundwater, and surface water. Then legislators proposed taking existing standards and unilaterally change them to arbitrary levels – levels not based on science, just numbers that would show their constituents they’re “doing something.” After articulating the folly of this approach, these bills were defeated.

We had a mixture of wins and losses in the areas of tax policy, economic development, health care, and education. For example, the House and Senate missed opportunities to put downward pressure on New Hampshire electricity prices, which are already 50-60% higher than the national average year-round. They instead listened to special interests that wanted ratepayer subsidies for unprofitable power generators.

The season at the State House is over and we spectators are already thinking about the next season coming up in January. BIA’s Legislative Scorecard and Victories & Defeats publication is a stat sheet for voters to evaluate their elected officials and determine who’s an MVP and who should ride the bench.

Is there a trade war on the way?  Or is these announced sanctions, as President Trump’s new top economic advisor Larry Kudlow says, merely “first proposals” in a broader trade negotiation?

Either way, New Hampshire should be OK.  Why? Because the good news (and bad) for New Hampshire business is that foreign trade is just 18 percent of the state’s economic activity. So even if the US and China are serious about the tit-for-tat sanctions currently under discussion, the impact on the Granite State should be relatively small.

According to data from the US Census Bureau, New Hampshire exported a total of $5.1 billion worth of goods in 2017, accounting for just 0.3 percent of all US exports. As the New Hampshire Employment Security, Economic and Labor Market Information Bureau put it, “the total value of exports from New Hampshire is relatively small, ranking 43rd when compared to the other states and the District of Columbia.”

New Hampshire’s number one export? Civilian aviation equipment, though overall telecom and related tech dominate New Hampshire’s export sector.

And if a China/US trade war should ignite, New Hampshire will benefit from the fact that its largest export recipients are in North America, not Asia. Canada and Mexico are the top of the list of nations receiving New Hampshire exports. In fact, when it comes to goods (as opposed to services), New Hampshire exports more to the United Arab Emirates than to China.

If these numbers seem surprisingly low, it’s probably because—like most Americans—you overestimate the role of trade in the overall economy.  While the US exported a robust $1.454 trillion worth of goods and services in 2016, the nation’s GDP that year was $18.6 trillion. That’s more than a drop in the bucket, but it’s still a modest-sized bucket.

The states that rely most on foreign trade tend to be in the South, states like South Carolina, Louisiana and Tennessee. What do they have in common? Agriculture and relatively low-skill manufacturing. New Hampshire ranks 48th in the dollar value of agricultural output by state. Granite State manufacturing is more high skill and tech related.

If New Hampshire’s political and economic leaders really want to impact the state’s manufacturing sector, their priority wouldn’t be exports abroad. It would be lowering energy costs here at home.

In a new analysis of home value and purchasing power trends, New Hampshire ranks fourth in the nation, with home values up 6.1 percent in the last year alone.  Compared to the national average of a mere 2.3 percent increase, that’s good news for Granite State homeowners. In fact, some people are asking if the news is too good.

Housing prices are frequently mentioned by workers thinking of relocating to New England, in particular younger workers.  While rising home values can make existing homeowners happy, it makes relocating to New Hampshire that much harder for renters and would-be future buyers.

“We can say all day long that we want young people to move back here, but there is no place for them to live where they would like to live.” That’s the view of Carmen Lorentz, executive director of Lakes Region Community Developers. She told the Laconia Daily Sun: 

“Many of the young and talented workers that we are begging to stay or move to New Hampshire do not want to live in an apartment. Many of them want to own a house – that is part of the New Hampshire lifestyle they envision for themselves.”

And with New Hampshire home prices consistently rising faster than both the New England region and the rest of the nation, it makes that vision harder to realize. In an interview on NHPR last month, Executive Director of the New Hampshire Housing Finance Authority Dean Christon, described the NH housing market as “an environment where there’s price pressure and limited inventory of both [housing] up for sale and rental housing.  It affects lower income people more, and it affects people trying to purchase their first home.”

So are rising home values creating a crisis?  Mark Fleming says… not yet. Fleming is Chief Economist for First American Financial Corporation, the company that calculates the Real House Price Index (RHPI) rankings based on income, mortgage rates and an unadjusted house price index.  Fleming told NHJournal.com that, while New Hampshire housing prices are up, they still aren’t “back.”

“Our index for New Hampshire is a 68 on a 100 scale, 100 being the purchasing power of a homeowner in the year 2000,” he says.  “In real terms, New Hampshire is still 32 percent away from getting back to their year 2000 levels.”

A key factor in that relative affordability? New Hampshire incomes, which also rose last year. Personal income in the Granite State grew by 3.5 percent—the fastest in New England.

Still, Fleming says, unless something changes, the housing market could start having a negative impact on the rest of the economy by pricing out both young families and the skilled workers employers need. The issue, he says, isn’t on the demand side—even if interest rates doubled, there would still be a net increase in demand, Fleming estimates. It’s on the supply side.  There just aren’t enough housing units being built in New Hampshire for long-term price stability.

Bob Quinn, Vice President of Government Affairs for the NH Association of Realtors. agrees.

“We believe the best long-term solution is increasing housing stock and thereby maintaining our growing economy,” Quinn told NHJournal.com.  “The most significant impediments to housing from a public policy perspective are restrictive zoning laws. Some communities put up unnecessary obstacles to the development of housing, which increases the cost. We strongly believe in allowing developers to build more densely, therefore accommodating both the desires of home buyers while preserving New Hampshire’s natural resources.”

Data from the New Hampshire Housing Finance Authority appears to back this view. Their February 2018 Housing report found:

• A relatively low inventory of homes for sale, particularly under $300,000
• Housing permits (reflecting construction activity) of multi-family and single-family homes at half the level they were prior to the Great Recession (end of 2007)

In addition to increased supply, Fleming also urges New Hampshire leaders to promote education in high-skill, high-wage jobs.  “Your region is never going to compete on price,” Fleming says. “But you can encourage young people to pursue the high-wage jobs of the future to pay the housing prices of the future.”

The good news is that New Hampshire’s housing assets continue to increase in value. Perhaps the better news is that, with increased inventory and an educated workforce, New Hampshire has the public policy tools to keep from “valuing” itself into a housing crisis.