AUGUSTA, Maine — The latest index of State Economic Momentum indicates Maine has the ninth-highest momentum in the nation, and the highest in New England.
“This is encouraging,” Gov. John Baldacci said. “We have a lot more work that needs to be done, but I do think it indicates that we are beginning to make more progress.”
The index measures personal income growth, population growth and employment growth. It is issued quarterly by State Policy Reports, a Washington, D.C., think tank funded in part by the National Conference of State Legislatures and the National Governors Association and is based on federal government data.
Maine had the second-highest increase in personal income in the nation at 1.5 percent. There was a decline in personal income in 33 states. Maine had a decline in total employment of 1.1 percent, well below the national average of 2.1 percent. Maine was hurt in the index rating because it was one of two states to experience a decrease in population. Maine was down one-tenth of a percent.
“This is certainly good news,” said University of Maine economics professor Jim Breece, a member of the state’s revenue forecasting committee. “But like all of these things, the devil is in the details.”
He said the detail that causes him most concern is the increase in personal income. He said — and the federal Bureau of Economic Analysis confirms — much of Maine’s income growth was from the increase in federal transfers into the state for such programs as extended unemployment benefits.
“This was at the height of the recession, and we had a lot of people getting unemployment,” Breece said.
In addition to Maine, the Bureau of Economic Analysis indicated Kentucky and Hawaii also had a significant part of their growth from increased federal payments. The national average was a loss of just under 1 percent of income.
University of Southern Maine economics professor Charles Colgan said the three measures used in the index are good measures of economic growth. He is chairman of the state Consensus Economic Forecasting Commission and said the report certainly is good news.
“It’s one of the few times I can remember that the Maine economy has performed in the top 10,” he said.
He agreed with Breece that the income figures were bolstered by transfer payments, but he said that is not new and includes the payments for such programs as Medicare, Medicaid and Social Security. He said the state’s relatively high percentage of seniors has been a factor in higher federal transfer payments for several years.
“The employment numbers show we have not been hit as hard as some other parts of the country,” Colgan said. “The revisions in the personal income and employment numbers that have come in also show that we did not fall as far as we first thought we had.”
Breece said Maine still has a long way to go to catch up with other states. He said per capita income is still below the national average at 28th in the nation. The national average is $39,138 a year while in Maine the per capita personal income is $36,745. That is the lowest in New England.
“While it is good to have some momentum, we still have to be concerned,” he said. “This report shows us with a decline in population.”
But Colgan said the one-tenth of a percent population decline may not be a long-term indicator because it basically is looking at 2009 when a military base closing occurred in southern Maine.
“That’s when we had the move of the P-3 Orion squadrons from Brunswick down to Jacksonville, Florida,” he said. “That’s several thousand people we lost.”
Colgan said the census estimates of in-migration have traditionally not been a good measure of what is actually happening. He said the actual census under way this year will provide the first good data since the last census a decade ago.
“I think we have some in-migration that has not been picked up,” he said. “I don’t think this is as bad as it seems at first.”
Baldacci said what pleased him most about the report was that Maine came in ahead of neighboring New Hampshire.
“Because everybody is always saying why aren’t you doing what New Hampshire does,” he said. “If we did, I can say we would have been number 10 instead of number nine.”