New England economy expected to lag nation

BOSTON – New England will lag the nation in economic growth through 2010, with New Hampshire and Massachusetts posting the region’s fastest growth, a regional forecast organization predicted Tuesday.

The New England Economic Partnership said none of New England’s six states is expected to exceed the nation in job, income and overall economic growth over the next four years, a trend in line with the region’s generally lagging performance in recent years.

The forecast group also cautioned that the latest of its twice-a-year forecasts is more speculative than usual, given uncertainty about the duration of the current housing slump, which has sent home prices slightly downward in many areas.

“There is a relatively high downside potential of the forecast, mostly influenced by uncertainty in the housing market,” Ross Gittell, the organization’s forecast manager, said in remarks prepared for the forecast’s release at a conference in Westborough, Mass. “A weaker and longer-to-recover housing market nationally and in the region than that in the forecast would have a significant negative influence on the New England regional economy.”

Employment in New England is expected to grow at an average rate of 0.8 percent per year through 2010, below the forecast of 1.3 percent per year for the nation. The region’s jobs total, which hit a historic peak of 7.083 million in early 2001, isn’t expected to return to that level until the fourth quarter of 2008.

Regional per capita income growth is expected to lag the nation at 2.5 percent per year compared with 3.4 percent for the nation, according to the 35-year-old nonprofit forecast organization, whose members are from private industry, government and academia.

In its previous forecast issued in May, the forecast group predicted New Hampshire, Connecticut and Vermont would be the pacesetters for New England’s slow-growing economy through 2010 with Maine, Massachusetts and Rhode Island bringing up the rear.

The new forecast again ranks New Hampshire highly, but says the outlook is improved for Massachusetts, which has lagged the region’s growth in recent years but is now expected to exceed it through 2010.

The Maine forecast shows more than 2,000 new jobs in the next year for a modest annual employment growth rate of 0.3 percent. Personal income growth is up with recent federal data showing a 4.8 percent increase in the first quarter and a 4.7 percent increase being forecast for all of 2006. Service jobs are expected to yield modest overall growth in the state’s economy.