Maine’s economic growth lags 40 states

PORTLAND – Federal figures confirm that Maine’s economic growth ranked among the nation’s slowest from 2005 to 2006, and a leading state economist foresees continued weakness this year.

Maine’s Gross Domestic Product, a measure of the state’s output of goods and services, increased by an inflation-adjusted 1.9 percent last year, according to the U.S. Bureau of Economic Analysis. That compares to 3.4 percent growth nationally and 2.5 percent for the region.

“The New England economy is doing relatively well, but Maine is not one of the states that’s gaining momentum,” said Yolanda Kodrzycki, an economist with the Federal Reserve Bank of Boston.

Maine’s growth rate was slower than all but nine states last year. Idaho posted the strongest GDP growth, at 7.4 percent; Michigan, whose economy contracted 0.5 percent, was the only state to record a decrease.

In New England, Massachusetts led with a growth rate of 2.9 percent. New Hampshire had the slowest growth in the region last year, with a GDP increase of 1.3 percent.

Economic bright spots for Maine included forestry and technology, while construction and utilities were among the sectors that showed a decline.

Economist Charles Colgan, who projected growth of 1.3 percent for 2006 to 2007, said low wages go a long way in explaining Maine’s slow growth.

Kodrzycki noted that Maine has had a net increase of only 16,000 jobs since early 2002. By contrast, Maine businesses were creating new jobs in excess of 10,000 a year in the late 1990s.

Employment from June 2006 to June 2007 inched up 0.6 percent, only about one-third of the national average of 1.7 percent, she said.

Catherine Reilly, Maine’s state economist, cited Maine’s slow population growth as a factor in economic performance.

Many of the fastest growing states also lead in economic growth as population gains provide more consumers while creating a larger labor pool for businesses to draw on.