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Maine Economic Forecast: Slow and Steady
11/13/2013   Reported By: Patty B. Wight

Slow and steady is the latest economic forecast for New England. A new report by the New England Economic Partnership says the region is still licking its wounds from the recession, and faster growth has been hampered by federal spending cuts, as well as the recent government shutdown. As Patty Wight reports, changing local forces are also shaping Maine's economy, which lags behind other New England states.

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Maine Economic Forecast: Slow and Steady Listen
 Duration:
2:46

Let's start with the good news about Maine's economic progress since the recession.

"I think we have turned a corner in this recovery, from fitful starts and intermittent growth to a steadier path," says Charlie Colgan, former state economist and professor at the University of Southern Maine.

Colgan says most of the growth is in professional and business services, as well as leisure and hospitality. But Colgan says this good news is tempered by the state of the current U.S. economy as a whole. "Unfortunately, the steady path is still very slow, and depends hugely on an uncertain national economy."

"Federal fiscal policy is a wildcard at the moment," The Maine Center for Economic Policy's Joel Johnson, a member of the Economic Forecasting Commission, told the Legislature's Appropriations Committee on Wednesday. "The impact of the government shutdown remains unclear, and there are budget and debt ceiling deadlines looming in early next year, in January and February."

Johnson says six months ago, the forecast was that Maine would return to pre-recession levels for wage and salary employment by 2016. Now, he says, those sectors of the economy are expected to stay well below pre-recession levels through 2017.

But Maine isn't alone in its deflated forecast. Though states like Massachusetts, New Hampshire and Vermont have the strongest economies in the region, the New England economy overall is growing much slower than expected, and more slowly than the rest of the nation, says Dr. Ross Gittell, the forecast manager for the New England Economic Partnership.
"The demographics contribute to slow labor market and employment growth in many of the New England states."

By demographics, Gittell is talking about aging baby boomers who are starting to retire. "Making the region less attractive to rapidly-growing industry that needs a large employment base, particularly younger workers."

Charlie Colgan says these demographic forces will dominate much of Maine's economy for the next two decades.

"We don't have enough younger workers in the pipeline to replace the older workers who are leaving it," he says. "And the difference is going to have to be made up by people coming here from away, and that's going to require that wage rates go up and people compete on a national or regional market to hire people. And that's going to be a very different Maine."

Colgan says in the last 30 years, Maine has built an infrastructure that allows it to be less reliant on the Boston economy, and the state's overall employment has actually grown faster than Boston's in that time. Colgan says it's up to the state to secure its economic future and prove that loosening that tie will benefit the state for the long haul.



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