Newsletter and Subscription Sign Up

Federal Aid Reduces Poverty, Boosts NH Economy

Published Friday Jan 13, 2023

Author Phil Sletten

Federal Aid Reduces Poverty, Boosts NH Economy

Economic data during 2022 have provided mixed signals about the economy. Monthly employment reports show job growth both in NH and nationally, but inflation data continue to indicate families are having to stretch budgets further as wages have not consistently kept up.

However, recently released data provide clarity on one key point: federal efforts to boost the economy in 2021 appear to have worked and have been particularly helpful for people with low or moderate incomes.

Targeted Stimulus
The American Rescue Plan Act of March 2021 continued several targeted relief policies the federal government established in 2020, but also aimed to support the recovery from the pandemic.

The American Rescue Plan Act enhanced food assistance, expanded the Child Tax Credit and the Earned Income Tax Credit, boosted unemployment compensation, funded more home energy assistance, and provided aid to state and local governments. Moody’s Analytics published projections in early 2021, estimating an increase of $1.61 in economic activity per federal dollar invested in food assistance expansion in 2021, $1.49 per dollar for supplemental unemployment insurance payments, and $1.25 per dollar for the Child Tax Credit.

Federal data show 2021 was a good year for Gross Domestic Product growth, historically high corporate profits, and strong job creation. But newer U.S. Census Bureau data released in September provide more information about the direct, positive effects of federal aid during 2021.

According to a measure of poverty that includes income from key assistance programs and tax credits, the national child poverty rate fell by about 46% between 2020 and 2021.

The expanded Child Tax Credit was the single largest contributor to that decline, lifting 5.3 million people out of poverty and boosting incomes for households with children living at or near the poverty level. In 2021, a family of two adults and one child was in poverty if their annual income was below $21,811.

From July through December 2021, about $320.7 million flowed to NH families through advance monthly payments of the Child Tax Credit. These payments helped Granite Staters afford food, rent, utilities, and educational expenses for their children. This aid and other assistance programs reduced hardship despite the economic effects of the pandemic.

Other data also show the positive effect of federal aid. Food insecurity in NH declined between 2019 and 2021 relative to the prior three years of 2016 to 2018, despite the economic effects of the pandemic. Statewide food insecurity dropped to 5.4%, much lower than it was during the Great Recession and its aftermath. The aid programs operating in 2020 and 2021, particularly the Child Tax Credit, likely helped many Granite State families put food on the table.

Broader Economic Effects
Newly released U.S. Census Bureau data for NH suggests targeted federal aid programs and tax credits helped speed this economic recovery relative to the last one.

Median household income in NH took about 10 years to recover from the Great Recession after adjusting for inflation. During that decade, the median Granite State household had less purchasing power to cover their living expenses than it had prior to the Great Recession. In contrast, NH’s median household income in 2021 was significantly higher than the pre-pandemic inflation-adjusted 2019 estimate.

The assistance enabled thousands of families to spend more money in the local economy on needed goods and services.

Ongoing Challenges
However, the state faces headwinds to an equitable economic recovery. Accelerating inflation coupled with the end of many assistance programs meant that about one in three Granite State adults reported it was difficult to pay for usual household expenses during the summer.

In addition, fewer workers were employed in key sectors last summer than prior to the pandemic, including health care and social assistance, the state’s largest employment sector. The growth of the labor force is constrained by a severe lack of housing, preventing people from moving into the state, and by limited access to child care. Also, more Granite Staters are entering traditional retirement ages, and younger workers may not be readily available to replace them.

Evidence shows key federal assistance policies supported people and boosted the economy in 2021. These lessons should not be forgotten as NH deploys resources to support Granite Staters and promote an inclusive economy in 2023.

Phil Sletten is the Research Director at the NH Fiscal Policy Institute, an independent, nonprofit, nonpartisan public policy research organization based in Concord. Learn more at

All Stories