AUBURN – Enjoy it while it lasts.

That was the advice from Charles Colgan, economist and professor at the University of Southern Maine’s Muskie School of Public Policy, to a crowd gathered at the Hilton Garden Inn Thursday for the monthly Chamber of Commerce breakfast.

He was speaking of the economic prosperity that Maine is enjoying now. But in a nod to future uncertainties – especially the slide of the U.S. dollar and shifting Pentagon priorities – he cautioned that any economic forecast could misfire.

“My message is basically one of optimism and solid prospects for growth,” he said. “But there are some heavy-duty risks out there that we’ve got to pay attention to.”

Among the good news: There are about 5,000 more jobs in 2004 than there were in 2003. Colgan said Maine recovered all its recession job losses by the third quarter of 2004 – unlike the rest of the country.

“We’re ahead of the rest of New England,” said Colgan. “We’re through the recovery phase and onto (job) growth.”

Colgan said he expected to see job gains continue through 2008, primarily in the health and education fields, and then in the leisure and hospitality sector, as well as professional and business services. Manufacturing is expected to see a slight decline in jobs, but nothing like the 17,000 job losses that occurred between 2000 and 2003.

Construction is expected to remain strong, fueled by record-low interest rates and bargain housing prices compared with other New England states. Colgan said that in 2004, the median home price in Maine was $137,000; in Massachusetts it was $348,000.

That differential looks pretty good to many of the state’s newcomers, who are moving to Maine from seacoast counties in New Hampshire and Essex County in Massachusetts. Colgan said they are the people making up the bulk of Maine’s population gains.

And the gains are considerable. The state grew by 47,000 people between 1990 and 2000, according to Census figures. But between April 2000 and July 2004, Maine gained 42,000 people.

“That’s a significant turnaround,” said Colgan. “We’ve got solid population growth in the state.”

Those who are leaving the state seem to be concentrated in the 20- to 24-year-old age bracket, indicative of people who are attending college elsewhere, said Colgan.

Balancing the good news is a litany of risks that Colgan cautioned about. Energy prices should remain in a narrow range through the decade, but world events don’t allow for any guarantees. Likewise, Colgan said no one knows when the overextended consumer will collapse.

“We’ve kept the economy afloat on a sea of credit card debt,” said Colgan.

In an era of astonishingly high corporate profits, wages haven’t kept pace proportionally, and Colgan said there needs to be an adjustment in that balance to help the overextended worker.

And the two national deficits – federal and trade – undermine national economic gains. Colgan laid out this scenario: As Americans spend more money on goods – especially those made in China – that money leaves the country, goes to a Chinese manufacturer and then a Chinese bank. That bank buys U.S. Treasury bills, thereby financing the U.S. debt.

But as the U.S. dollar slides, foreign investors are less likely to want U.S. investments, and the fear is they’ll pull out of the market, said Colgan.

That would spike interest rates and chill capital investments.

“If that happens, the numbers I’m showing may not be as optimistic,” he said.

The final risk Colgan identified to Maine’s prosperity also lies in a global sphere: war and our preparedness for it.

He said the cost of the Iraq war will continue to cause the Pentagon to shift priorities, and that has the potential to stall the Navy’s DD-X program, on which Bath Iron Works depends. The shipyard is finishing up its work on Aegis-class vessels and expects the new round of DD-X warships to provide employment for the yard’s 6,000 workers through the decade.

There’s also concern that Brunswick Naval Air Station and Portsmouth Naval Shipyard might not survive the next round of base closures.

“In a worst-case scenario – if Brunswick and Portsmouth shut down and if BIW cuts back future projects, then most of the job growth I forecast for the next two to three years will disappear,” said Colgan.

“I don’t think that’s likely to happen, but it’s a risk.”