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Maine's Economic Forecast for 2013: More of the Same
01/03/2013   Reported By: Keith Shortall

What's the outlook for Maine's economy in 2013? Another year of the same, pretty much. There are some bright spots, according to several veteran analysts we spoke with today. But, for the most part, Maine continues to shuffle along, hoping for a lift from the national economy. And that could mean another tough year for many families in the region. Keith Shortall reports.

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If you ask economist Charlie Colgan, there's a definite pattern developing. "The Maine economy through 2012 looked almost exactly like 2011, which looked almost exactly like 2010," he says.

Colgan, who does detailed annual forecasts for the Muskie Institute of Public Service at the University of Southern Maine, says there may be some growth for Maine - and for the nation - in 2013, but not much. It's likely that we'll continue a very slow, protracted recovery from the recession, which technically ended, by the way, back in July 2009.

"This is not unusual when the recession is caused by a financial crisis, particularly of the magnitude that we saw," Colgan says. "Here's a number: In 2008 there were $88 bet on the U.S. mortgage market for every $1 of house sales. Somebody had that money out their on their books. We know it's just going to take years, basically three years, for that to get fixed."

And to really be fixed, says Colgan, Maine will need help from the U.S. economy, which has so far failed to move quickly enough to make a difference. There are signs that the nation is poised to grow. Household debt levels have gone down, and the government is reducing its deficit at the fastest pace since the end of World War II.

"At the same time Maine has definitely suffered relative to the rest of the country," Colgan says. "And the major reason for that is we are not well positioned in the industries that have been growing."

So what to do? Some, including Forbes magazine, say Maine should lower its corporate tax rates - which are said to be among the highest in the country - in order to attract thriving businesses.

"My personal criticism of things like the Forbes evaluation is that it can't be as single-minded as some of those factors are - it has to be more broad than that," says Jim Clair, who chairs the Consensus Economic Forecasting Commission, which helps guide policy makers in Augusta. He is also the CEO of Goold Health Systems, based in Augusta.

"The single most important factor for a company like mine, which I think is indicative, in many ways, of the way Maine's economy is going to grow, is by having highly-competent technical people who are prepared to learn the rest of their lives," Clair says. "That's our single biggest issue."

In the meantime, Charlie Colgan, of USM's Muskie School, says there are some fields in which Maine already has a demonstrated edge, such as geo-spacial analysis, and in disability insurance. And while Maine is often described as the "oldest state in the nation," Colgan says the most recent migration data to Maine offer indications that we are, in fact, attracting younger skilled workers.

"The majority of the people who moved to Maine from 2005 to 2010 were 18 to 34 years old, and a majority had a college degree or better," Colgan says. "I suspect most of those people came into health care, but I think that many of them came for other kinds of jobs in environmental and engineering services and other areas where we do, in fact, have real comparative advantage."

The problem, though, is that there just aren't enough of them. According the U.S. Census, Maine grew by just 634 people last year.



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