Colgan: Jobs recovery expected in 2016

Posted May 23, 2013, at 7:20 a.m.
Economist Charles Colgan of the University of Southern Maine’'s Muskie School of Public Service predicts Maine won't reach full post-recession job recovery until late 2016
University of Southern Maine | BDN
Economist Charles Colgan of the University of Southern Maine’'s Muskie School of Public Service predicts Maine won't reach full post-recession job recovery until late 2016

The year 2013 is off to a promising start — but don’t get used to it.

Charlie Coglan said he’s hoping for nine months in a row with modest job growth, a streak Maine hasn’t seen since 2007.

Ahead of his state forecast for the New England Economic Partnership conference in Boston on Thursday, Colgan said he had revised an earlier outlook for Maine coming out of the recent recession.

One year ago, he forecast full job recovery by 2015.

Now it’s late 2016.

“We’re up over the first quarter about 4,000 jobs, but the forecast basically says we won’t gain much more the rest of the year because of what’s happening with the national economy,” said Colgan, a professor at the University of Southern Maine’s Muskie School of Public Service and a former state economist.

As a small state, Maine needs a strong national economy to pull it along, Colgan said. So far, that’s not happening.

He pointed to payroll taxes “suppressing growth” and the recent federal sequestration causing problems, such as a late opening at Acadia National Park.

Maine lost 29,000 jobs in the recent recession and has so far gained 6,000 back, according to the Department of Labor.

That pace places Maine in the bottom among New England states, according to Ross Gittell, NEEP’s forecast manager and the chancellor of the Community College System of New Hampshire.

Gittell’s take on the region:

* Massachusetts is leading New England’s recovery with strong growth around Boston and Cambridge in high-tech and start-ups. That state has all the jobs back it lost in the recent recession.

* Vermont is expected to recover next. The state wasn’t hit as hard and it’s coming off a good ski season.

“There’s a big second and third home market in Vermont from Wall Street investors,” Gittell said. “Vermont still is (also) benefiting from significant federal money coming in after Hurricane Irene.”

* New Hampshire has recovered half of its lost jobs. The southern part of the state benefits from being pulled into “greater Boston.”

* At 8 percent, Connecticut still has a high unemployment rate, Gittell said. It has also seen less defense spending. Like Maine, it’s forecast to recover in late 2016.

* Rhode Island, forecast to recover in 2017, is seeing the slowest growth in New England. Gittell cited industry mix, taxes and regulatory structure.

* Maine’s business mix isn’t helping here.

“There’s no real significantly growing industry that helps make up for the loss in government jobs and the weaknesses in the national and global economy,” Gittell said.

He said it would be mid-2014 before the region sees “significant pickup” in growth.

“We keep on expecting this recovery to pick up some momentum; it just hasn’t,” he said.

Industries that Colgan anticipates adding jobs in Maine: professional and business services (lawyers, accountants, engineers, consultants), leisure and hospitality and, to a lesser degree, health care.

The Thursday conference was set to highlight manufacturing in New England. Colgan said Maine lost 9,000 manufacturing jobs in the current recession. Employment has evened out at 50,000, and that’s where he’s forecast it to stay.

Lumber and wood products may start to pick up in 2016 and 2017 as construction grows. He’s not as optimistic about paper.

“The publishing industry remains mired in very complex competition with electronics and other things,” Colgan said. “(Bath Iron Works) is looking OK; it does not look like they’ll be much affected in the short run. The Navy may be increasing their procurement on Arleigh Burke destroyers, which may help them in the long run.”

Colgan has said this has been a tough recession to forecast. In late 2010, he predicted a recovery in mid-2014. By late 2011, he had adjusted that to 2017.

“The basic pattern has stayed pretty much the same, which is the short-term outlook is for relatively slow growth beginning to pick up in one to three years, but every year something has come along to disrupt that pattern,” Colgan said. “The major fiscal policy is now set. The sequestration is in place, the tax increases are in place, the underlying economy as I’ve been saying for sometime continues to heal itself.

“If nothing else happens, I’m feeling a little more confident about this forecast than I have in the past, but the ability of political leadership and other things to get in the way has not gone away,” he said.

 

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