Jobless rate in Maine may rise

PORTLAND – A leading economist said Maine’s unemployment figures likely will mirror national numbers when they’re released later this month.

The national rate rose to 5.4 percent, up from 4.9 percent in September. The increase is the largest one-month jump in 15 years, and it represents the highest rate in nearly five years.

Maine’s unemployment rate was 4.3 percent last month, and new figures will come out in a few weeks.

The figure could approach 5 percent in Maine, said Charles Colgan, an economist and professor of public policy and management at the University of Southern Maine’s Muskie School of Public Service.

Maine’s unemployment rate has been well under the national rate for the last several years.

Colgan said he expects Maine’s jobless rate will continue to trail the national figure, but the trend lines for both numbers will be the same – up – for about nine months.

Colgan, who also is chairman of Maine’s Consensus Economic Forecasting Commission, said he expects Maine’s unemployment rate to continue to rise until the second or third quarter of next year.

The recovery from that point will probably take more than a year, he said.

The sharp rise in the national unemployment rate was caused by the loss of 415,000 jobs in October, the Labor Department said, the biggest reduction in payrolls in more than 20 years.

Many economists said they believe the terrorist attacks on Sept. 11 pushed a teetering economy into a recession.

The national economy contracted 0.4 percent in the July-September quarter this year.

With the textbook definition of a recession being two consecutive quarters of economic decline, there’s no sign that a recession will be avoided this year.

Laurie Lachance, the state economist, said the good news is that many economists are predicting a short and relatively mild recession, with a recovery based on higher defense spending and outlays for security.

The models her office uses, Lachance said, indicate that revised figures will show the economy shrinking by 0.3 percent in the third quarter and by 0.6 percent in the fourth quarter, then returning to growth next year.

“That’s a very shallow recession and very short,” Lachance said.

Lachance said there are a couple of major differences from the early 1990s, when Maine suffered a severe recession.

For example, most banks are continuing to report profits. In 1990 and 1991, Maine banks racked up huge losses. Additionally, Lachance said, Maine’s real estate market has not been driven to unrealistic levels by a lot of speculative construction.

Colgan said Maine also has been buffered by not having a lot of manufacturing and high-technology jobs – the two sectors that went into decline first and are likely to struggle the longest.