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Maine Economic Forecast Remains Cloudy
10/18/2013   Reported By: Mal Leary

Several statewide trade groups, including bankers, realtors, car dealers and manufacturers, are telling the state Consensus Economic Forecasting Commission that Maine's economy continues to slowly grow but has still not recovered from the recession. And as Mal Leary reports, state revenues for the first quarter of the budget year reflect that assessment.

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State revenues were up in July, down in August and pulled into the black in September, with more people working and self-employed Mainers filing estimated tax payments that exceeded expectations. Overall revenues were up nearly $20 million in September, putting the state in the black for the first quarter of the state budget year.

Sawin Millett is the state's Finance Commissioner.

"I would look at the first quarter of FY '14 as favorable and positive in the larger income lines, namely individual income and sales," says state Finance Commissioner Sawin Millett. "We are still struggling with the corporate line. But on a year-to-date basis we are up $13.3 million."

Most of the good news was generated by the income tax, with estimated payments from self-employed Mainers up 12 percent. But TD Bank's Larry Wold, representing the Bankers Association, says other sectors reflect less growth.

"Residential real estate loan growth has been up just over 2.5 percent, home equity loan growth is less than a half a percent in terms of growth, other consumer loans have contracted by about 5 percent," Wold says.

Mark Stevens, president of the Maine Realtors Association, says there has been a steady increase in home sales across the state. But the average price has increased only to the level of 2004, well below the highest average price that was set in 2007, just before the worldwide financial meltdown.

"The coastal communities are seeing a definite uptick toward the end of the summer and into the fall in seasonal properties," Stevens says.

Lisa Martin, with the Manufacturers Association of Maine, says that sector of the economy has weathered the recession and is seeing an increase in workers that are making good wages.

"It has increased 6 percent over the last year," Martin says. "What we look at, obviously, is wage information for this sector. The average wage is over $54,000 here in the state of Maine."

Tom Brown, from the Maine Auto Dealers Association, told the panel that car and truck sales continue to improve, but not as well as they are in other parts of the country.

"In the United States this year, year to date is up about 8.2 percent," Brown says. "In '13 for Maine we are up about 5.6 percent in new vehicle sales and leases."

Finance Commissioner Millett says he expects sales tax revenues for the month of September will be higher, as consumers rushed to make big-ticket purchases in advance of a sales tax increase that took effect on Oct. 1. He says the federal government's partial shutdown will likely have an impact on the state's economy and on revenues, but he says that will be hard to assess.

"Initial indicators are that the effect of the shutdown on overall GDP may shrink calendar year growth by much as three-tenths of a percent to as much as a half a percent," Millett says. The gross domestic product - or GDP - is a measure of all economic activity in the country.

Millett says he is also concerned that the uncertainty created by the budget impasse in Washington could have longer-lasting effects in Maine, as consumers hold off on purchases in fear of another impasse next year.


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