Economist: Maine adding jobs, but won’t recover from Great Recession until 2018

Charles Colgan
Troy R. Bennett | BDN
Charles Colgan
By Kathryn Skelton, Sun Journal
Posted Nov. 13, 2013, at 10:39 a.m.

Charlie Colgan believes Maine is about to hit three consecutive quarters of job growth, something the state hasn’t done since 2007, before the Great Recession.

Colgan will deliver the mixed bag economic forecast as part of the New England Economic Partnership fall conference in Boston on Thursday.

In an interview, Colgan, a professor at the University of Southern Maine’s Muskie School for Public Service and former state economist, said he was waiting for the release of numbers next week to confirm the job-streak.

“What I’m looking for and what I’m forecasting is that we’ll get three and, hopefully, four steady quarters of employment growth,” he said. “If we can just keep momentum on employment growth, that would be the sign we’ve really begun to make some headway.”

The state lost 29,000 jobs in the recent recession. It’s gained back about 9,000 so far.

Hampering Maine’s recovery: Not enough people.

In most counties, deaths outnumber births and in-migration, people moving here, has slowed, he said. They’re needed to fill new jobs and existing jobs as people retire.

There are some positions, Colgan said, doctors, for instance, that can largely only be filled by people from outside.

Due to that, he’s forecast Maine’s unemployment rate dropping to 6 percent in 2016, “That’s from a combination of people leaving the workforce and job growth more than it is robust job growth,” he said.

Colgan has forecast hiring to come in professional and business services and leisure and hospitality, with modest growth in retail, construction and manufacturing.

“People locked up their wallets; you’d expect retail to come back more,” Colgan said.

They are, to a point, but more people are shopping online: “The era of big box construction is over. We’re now pretty much at the tipping point. It’s starting to make a big difference in the employment numbers for retail.”

In the forecast, most of the job gains come in late 2014 and 2015, then slow in 2016 and 2017. That slowdown, he said, will signal, on the national level, a return to normal growth versus recovery.

“The U.S. economy will come back onto a normal growth path in a sense too soon for Maine,” he said.

New England Forecast Manager Ross Gittell predicted that all the jobs lost in the recession across New England will be gained back by 2014 — just not necessarily returned to the states they were lost in.

Massachusetts, New Hampshire and Vermont are leading the region in growth, he said. Hurting Maine is its distance from Boston, which has been doing well, the mix of jobs here and the low number of people with a college degree.

“The bright spot in the regional economy is the housing market,” Gittell said.

Construction work is up, as are housing prices. “That has turned from a deterrent to economic recovery to providing a sort of stimulus to the economy and improving the job outlook for the region,” he said.

In the next two months, Colgan expects spending to be up modestly this Christmas season — income hasn’t grown to allow more than modest growth, he said. But, expect price wars.

“Retails are already trying to figure out how to move Black Friday into this week,” he said. “The retail industry is really chasing after those dollars. This will be a buyer’s market.”

He didn’t anticipate next year’s race for the Blaine House to factor into the larger economy, with the exception of helping the advertising industry.

“It doesn’t factor in very much,” Colgan said. “There’s very little governors can do in the short run to affect the economy, whether a Republican, Democrat or independent.”

http://bangordailynews.com/2013/11/13/business/economist-maine-adding-jobs-but-wont-recover-from-great-recession-until-2018/ printed on July 25, 2014