N.E. economy expected to lag behind nation Poor job growth hurts Maine

BOSTON – New England’s economy will continue to grow at a slightly slower pace than the nation’s over the next four years with New Hampshire leading the pack and Maine and Vermont seeing the slowest gains, an economic forecast group said Wednesday.

The New England Economic Partnership’s latest twice-yearly forecast was roughly in line with previous forecasts as the six-state region continues to recover slowly from the national recession that hit more than four years ago.

The primary measure the panel of New England economists uses in the forecast – gross product, the total value of goods and services produced – is projected to rise 3.1 percent per year on average from 2006 through 2009. That compares with 3.3 percent for the nation as a whole.

Growth in the six New England states is expected to peak at 3.5 percent in next year’s second quarter, then level off and remain around 2.5 percent through the first half of 2007. It is then expected to rise above 3 percent.

In Maine, the outlook is darker than earlier projections because of lagging job growth and an unemployment rate that has risen above the national jobless figure for the first time in seven years. Personal income growth is lagging, and retail sales appear weak. Gross state product is forecast to grow by 2.4 percent per year through 2009, slowest in New England.

Regional employment growth also is expected to lag behind the national average, posting an average 1.1 percent gain per year in New England over the next four years. National job growth is forecast at an average 1.4 percent.

The region’s employment reached a historic peak of 7.083 million in the first quarter of 2001 and is not expected to return to that level until next year’s second quarter.

The recession persisted longer in New England than in the rest of the nation, and recovery has come more slowly. After eight consecutive quarters of declines beginning in 2001, the number of jobs in the region finally began to increase in the second quarter of 2003.

New Hampshire’s economy is expected to lead the regional recovery in coming years as the state’s high-tech sector enjoys a recovery.

“The Granite State is the only state in the region expected to have overall economic and employment growth above the U.S. average over the forecast period,” said Ross Gittell, a University of New Hampshire professor who presented the forecast at the group’s conference in Westborough.

New Hampshire is expected to post an average 3.5 percent gain per year in gross state product over the four-year forecast period with Connecticut ranking No. 2 at 3.2 percent.

Massachusetts’ economy is projected to grow at 3.0 percent per year, followed by Vermont at 2.8 percent and Maine. The forecast group’s news release did not include a four-year growth projection for Rhode Island.

The New England Economic Partnership is a nonprofit forecasting organization that has been tracking the regional economy since 1971 with members from private industry, government and academia.