Maine must recover from significant employment cuts in 2002 before it can expect a rebound.

WESTBOROUGH, Mass. – New England economists said Maine’s economy has held up well through the current period of slow national growth, but that it will have to recover from a loss of employment in 2002 before it can continue to grow.

Charles Colgan, professor of public policy and management in the Edmund S. Muskie School of Public Service at the University of Southern Maine, said overall growth in the gross state product over the last two years has been about 1.5 percent, mirroring the “jobless recovery” of the United States.

Colgan went on to say “Maine must first recover from the significant employment cuts of (the fourth quarter of) 2002 before it can proceed to grow, assuming that the national economy provides enough momentum to carry Maine along.”

Colgan made his comments recently at the spring Economic Outlook Conference, hosted by the New England Economic Project. Economists at the conference predicted the New England economy overall will lag behind the nation’s until the second quarter of 2005.

While the national unemployment rate has grown to about 6.1 percent, Maine’s rate has remained at about 4.6 percent.

Although employment in Maine is anticipated to remain essentially unchanged for the remainder of 2003, the loss of $1.2 billion in public sector spending over the next two years, which enabled Maine to resolve its budget problem without tax increases or political turmoil, will affect employment growth in government and health care, which have been two sectors that have shown employment growth offsetting declines in manufacturing, according to Colgan.

Addressing the conference theme, The New England Economy Amid Global Uncertainty, Colgan said that while recent changes in the global economy have had an impact on the manufacture of paper, apparel and electronics in Maine, the state’s chief exports – wood products, computer chips and lobster – should be relatively unaffected.

One market that should enjoy gains this summer is tourism, Colgan noted. Specifically, the depreciation of the U.S. dollar against the Canadian Loonie, coupled with a trend toward shorter vacations by auto, should make Maine a more attractive market for Canadian tourists this summer, he said.