Maine residents – and not businesses – are being credited with keeping the state’s economy afloat and out of a recession during the last year.

But analysts are wondering whether consumers’ spending habits will continue into the new year if confidence in the economy continues to wane.

And the analysts are worrying about what the economic impact will be from a possible U.S.-led war against Iraq and political uprising in Venezuela. Either could lead to higher oil prices in January and February, when Mainers rely on heating oil to keep warm.

“It’s a little cloudy right now,” said Michael Allen, director of economic research with Maine Revenue Services, about the state of Maine’s economy. “There’s a lot of uncertainty out there.”

During the last year, Maine consumers were an enigma, shaking in their confidence about the economy but willing to spend money anyway to comfort their uneasiness. State economic analysts didn’t know how to react to consumers’ moods. Forecasts were difficult to write because Mainers weren’t exhibiting the commonly accepted behavior they traditionally do when worried about the economy – they were not cutting back on their purchases and they were not saving money.

“It’s very hard to understand where the consumer is coming from,” said Laurie Lachance, the state’s economist with the State Planning Office. “It’s not as clear as it used to be.”

People confident that they were going to still have a job six months down the road were more willing to spend money during the year than those individuals who witnessed mass layoffs and business closures elsewhere in the state and worried that they could lose their jobs, Allen said.

A good portion of the consumers’ purchases this year were made with credit cards, low-interest loans or extra income freed up by the refinancing of home mortgages, Lachance said.

“Ample and cheap credit has been a key to sustained spending,” said a recently issued report on the economy by the State Planning Office. “But households are experiencing mounting credit problems.”

The report stated that even though consumers have kept the Maine and national economies growing, they are beginning to feel the strain of carrying that burden on their shoulders. Personal debt is increasing, and consumers are not that confident about the near future.

“The hope is that consumers can keep the economy afloat just a bit longer, until business investment and hiring begin to improve,” the report said.

Businesses, however, have tightened their budgets and there is no indication as to when they will begin loosening them. The creation of new jobs during the year was minimal and money spent on improving operations was down 9 percent compared to the previous year.

States budgets are in dire straits mostly because revenues from capital gains taxes and from personal and business income taxes are down.

Throughout the country, according to analysts, businesses are watching national economic indicators such as recent increases in the gross domestic product to see if the growth is sustainable before they begin to make capital investments. Plus, businesses and investors are waiting to see how state budget deficits throughout the country – including a projected $1 billion biennial deficit in Maine – will affect the national economy.

“That’s the holding pattern we’re in right now,” said Janet Waldron, outgoing director of the Department of Administrative and Financial Services. “While there’s been growth [this year], it hasn’t been fueled by the business sector. That’s the part of the economy that needs to start moving again.”

The expectation that new businesses will open up shop in Maine and provide needed jobs is dimmed when state analysts mention that all of the states are waiting for that job creation to occur.

“At this point in time, with the national economy the way it is, you don’t have that many bigger firms looking to add locations,” said Craig Holland, a labor market analyst with the Maine Department of Labor. “We’re not having major firms looking to open up other than in the retail sector. I think that’s pretty normal everywhere, whether it’s Bangor, Maine, or California.”

Over the last 10 months, Maine’s economy grew by 3 percent, thanks mostly to consumers. Home improvement and construction purchases were up 8 percent, big-ticket general merchandise sales were up 8 percent, and consumer retail sales and restaurant and lodging receipts each were up 5 percent.

“The fact that we had an overall 3 percent growth is good news,” Waldron said. “Our sales tax has stayed reasonably stable with growth.”

But auto sales, which account for nearly one-fourth of the state’s sales tax revenue, inched up only 3 percent in the last 10 months after experiencing tremendous gains in the last quarter of 2001.

“The real issue is – How many cars can you buy?” said Allen.

How Mainers truly feel about the economy, and how comfortable they are about their own pocketbooks, should come into focus during the next few months. By late January, Maine Revenue Services will have some idea as to how much money Mainers spent during the holiday season as businesses begin reporting their December sales figures. Actual sales numbers won’t be available until late February.

Then, in March, consumers should be returning en masse to stores after their typical January and February hibernation period. And, on April 15, just about all tax forms will have been filed.

“The real test is we have to get through another April 15,” Waldron said. “That’s when you get the actual, factual effect” of consumer confidence.