BANGOR, Maine — Despite encouraging signs that the recession is subsiding, the rebound is likely to take five years or more, according to a University of Maine economist.
James Breece, vice chancellor of academic and student affairs, delivered a sobering economic outlook Tuesday as the keynote speaker at the Bangor Region Chamber of Commerce’s annual meeting.
“If you have a weak stomach, now is a good time to leave,” he said in his opening remarks.
Breece reiterated what many already know, that the recession (which is not over) is the worst in modern history. Already, it has lasted 25 months and has resulted in the loss of 7 million jobs, or 5 percent of the nation’s total, including slightly more than 5 percent of all jobs in Maine.
The stock market is volatile, oil prices are unstable and retail sales still lag. While most economic drivers are improving, “the rebound will not happen as fast as the decline,” Breece said.
Even improving numbers are misleading, according to some economists. For instance, Maine’s unemployment rate is starting to come back down after reaching historical highs near 9 percent, but Breece said that hasn’t translated to new jobs.
“I call it the discouraged-worker phenomenon,” he said. “They have either stopped looking for work or have moved on.”
Typically, residents move into the state at a higher rate than others move out, but last year was the first in a long time that saw a net migration out of Maine, he noted.
Breece also cautioned the large audience of Chamber members that many economic forecasters are basing their projections on the assumption that there will be a second federal stimulus package. So far, that idea hasn’t been discussed in Congress.
So, what can be done?
The biggest area where Maine can improve, according to Breece, is in what he calls value-added economic activity. As an example, he said, the state needs to think in terms of wood composites, not simply lumber; of ecotourism, not just lodging; and of vodka, not just potatoes.
Another big area is offshore wind power generation, and Breece said Maine would do well to leverage that potential to entice new businesses, especially those that are electricity-intensive. Among the areas he sees for growth are in pharmaceutical manufacturing, refined paper production, greenhouse agriculture and data centers.
“We may well be at a turning point and there are some encouraging signs,” Breece said. “But, expect growth to be slow.”
A complete look at Breece’s economic outlook can be found online at www.maine.edu/UMSoutlook.