The New England Economic Partnership said Thursday that the Maine economy may show “signs of life” this year, with a possible jobs recovery to pre-recession levels two years earlier – coming by 2015 instead of 2017, as had been previously forecast.
The Maine forecast, prepared by economist Charles Colgan of the Muskie School of Public Service, pegs the state’s swifter-than-predicted recovery on improving conditions nationally.
“The outlook for 2012 does show some growth for the first time, ending the year at about 598,000 jobs. This implies a growth of about 5,000 jobs on a quarterly basis over (the last quarter of 2011), though only about 3,000 jobs on an annual average basis,” the NEEP report said. “Beyond 2012, job growth accelerates along with the national economy in 2013-2016 to a rate of 1 percent per year or more, a growth rate not seen in Maine in more than a decade.”
While the report noted that Maine’s first quarter 2012 figures are “promising,” it added that “first quarter promises have been broken in the past.”
In the analysis, the NEEP economists noted that sectors such as manufacturing, construction, trade, transportation and utilities will recover jobs, but not enough to bring them back to pre-recession peaks. Compared to pre-recession levels, there will be net reductions in those sectors, as well as in government sector positions, the report said.
The group noted that the idea of a “structural mismatch” as an explanation for the lagging job recovery in Maine has an element of truth in it. That’s the general concept that Maine is strong in sectors that are growing slowly, or retracting, but weak in areas of growth.
“But it is in fact a very old story of changing from goods-related to service-related occupations, which has been an issue in good times and bad for forty years,” the report continued. “This cycle the shift is made more difficult by the fast growth, sharp decline, and slow recovery in construction jobs. But there are other job types, like office workers, where there have been major job losses and little to suggest a skills mismatch.”
On a national level, the group said the U.S. economy grows at a “solid if less than exciting pace.”
Real gross domestic product growth remains near 2.5 percent annualized, which is slow, but enough to expand employment by more than 2 million jobs this year and next, the group suggested.
“And with slow growth in the labor force, this will be sufficient to push the U.S. unemployment rate below 8% by the end of 2012, and closer to 7% by the end of 2013,” the group suggested. “The foreclosure wave at home and the debt crisis in Europe still threaten to disrupt the recovery.”
Regionally, NEEP said the New England economy will continue to grow slowly, with employment growth averaging 1.3 percent annually and overall economic growth averaging 2.8 percent per year through the end of 2016.
“The expectation is that the region will not return to its pre-recession employment level until 2015,” the group wrote.
In addition, NEEP projected that weakness in the housing market will continue to slow the region’s economic recovery. The group said declining or flat median housing prices are expected to continue in New England until mid-2013, and then increase only modestly.