Maine's economy shrunk in 2011

AUGUSTA — Maine was the only state in New England last year to see a reduction in the gross domestic product, which measures overall economic activity.

“It is the primary measure of economic growth for each state,” said Mike Allen, associate commissioner for the Department of Administrative and Financial Services. Allen, an economist, serves on the state’s revenue-forecasting committee. “This report does show that the state contracted in 2011.”

Maine’s economy shrunk by four-tenths of a percent, while the national economy grew by 1.5 percent and New England grew by 1.8 percent, according to the Bureau of Economic Analysis in the U.S. Department of Commerce, which issues an annual GDP report on the states.

Allen said it appears the reason for the decrease was the final closing of the Brunswick Naval Air Station and the loss of government jobs. A study done by the State Planning Office estimated the closing would result in a loss of 2,700 military jobs and 700 civilian jobs.

“We saw the last of those jobs go last year,” he said. “That had a big impact.”

Allen said the downturn would have an impact on projecting state revenues in the fall. He said the forecasting commission would start with a lower base on which to project tax collections.

University of Southern Maine Economics Professor Charles Colgan also believes the slight decrease in the state’s GDP was the result of the base closing. He said in 2010 the state saw some growth, even as the base was reducing its work force, but in 2011 private-sector growth did not offset the loss of government jobs at the base.

“We were up in other sectors that the rest of New England was up, and we were down in those areas where the rest of New England was down,” Colgan said.

“All of the small New England states had a weak year,” he said. “Massachusetts accounted for most of the growth in New England, with some improvements in technology and manufacturing.”

Allen said that with the revised numbers released by the Bureau of Economic Analysis, it appears Maine was hit hard early by the recession, and started a slow recovery that was seen in 2010. He said it appears that without the impact of BNAS finally closing, the economy would have continued its slow growth in 2011.

“The energy-producing states and states with large agricultural sectors are the ones that are showing the best improvement,” he said. Texas grew at a rate of 3.3 percent, more than twice the national average and the far-western states of California, Oregon and Washington, with their large agricultural sectors, grew at a rate of 2.1 percent.

Colgan said the GDP measure is considered a “very good indicator” of what is happening with the economy, even though employment numbers are more readily available. He said that while employment estimates are released monthly, the GDP is yearly and sometimes it takes months longer for the various indicators to be finalized.

“When you look at 2009 through 2011, they were pretty dismal years for the economy,” he said.

Allen said some revised numbers indicate that Maine went “sooner and deeper” into the recession than first thought and was hit hard during the depth of the recession by high energy prices that had a major impact on the state’s economy.

“You don’t want to be 46th in the country for ranking, and you certainly don’t want to be in a position of having negative growth," he said.

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Zack Lenhert's picture

Welcome to Lepage's

Welcome to Lepage's economy...


Last in New England

Well it's a good thing the governor cancelled all those bonds that the people of Maine approved in 2010. When you think about all the jobs that would have created and all the income tax money they would have provided towards the state coffers ( and balancing the budget) you have to fear we might lose our place as last. Besides we are not quite last nationally yet so we need to work on that. At least we can be sure Maine will not prosper before the elections. We wouldn't want people to think that Obama's policies of stimulating the economy worked better than the austerity that has thrown most of Europe into a double dip recession. All these tax cutting, government hating, no spending guys are doing is creating jobs for the Chinese. You have to buy a ticket if you want to have a chance at winning the lottery and you have to invest in your community if you want it to prosper.

Steve  Dosh's picture

Maine's economy shrunk in 2011

all 12.06.12 15:15 hst
So . .you shut down The Cat from Portland to la Canada , Vacationland ?
Doesn't seem that wise a move now , does it •
Alo'ha from Pahoa HI 96778 u s a
We - r u n - on tourism and know it . Hawai'i has 1,250,000 inhabitants ( like you ) and we receive > 10,000,000 every year :) h t h ?


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