Economist forecasts meager job growth for Maine

PORTLAND, Maine (AP) -- Wage and salary jobs in Maine are expected to grow by only 0.5 percent in 2013, but the state could actually lose jobs if Congress can't come to terms on federal financial matters, a leading Maine economist said Tuesday.

Maine should add only 3,100 jobs during the year, and the unemployment rate will remain essentially unchanged at 7.2 percent to 7.4 percent, said Charlie Colgan, a professor at the University of Southern Maine's Muskie School of Public Service.

But if the current automatic federal spending cuts remain where they are, the state instead could end up losing about 3,000 jobs, Colgan told about 300 business leaders at his annual Breakfast With Charlie economic forecast presentation at USM. And if Congress can't come to terms on federal spending and the debt ceiling — the government's authorized borrowing limit — then the state could lose about 18,000 jobs.

"I put the (chances) of my baseline forecast of job growth at about 55-45, but I change that on an hourly basis," Colgan said. "At the moment I'm being upbeat. I'm giving it a better than 50-50 chance."

Since the recession from December 2007 until mid-2009, Maine's recovery has lagged the nation.

Maine has recovered only 10 percent of the jobs it lost during the recession, while the U.S. as a whole has recovered 57 percent of its lost jobs and Massachusetts has regained about 80 percent of its lost jobs, Colgan said.

Economists estimate it will take 6 1/2 years for the country to recover all the jobs that were lost during the recession, but Colgan said it will take Maine 15 months longer to regain its lost jobs.

The slowest recovery in Maine from any recession in the past 60 years was 80 months, after the 1990 recession, Colgan said. That's 13 months quicker than the projected recovery from the latest recession, he said. But Maine's employment growth isn't likely to pick up until the national economy shows sustained traction, he said.

"We are 0.4 percent of the national economy," he said. "We are the hair on the end of the tail of the dog. Unless the dog gets moving, we just kind of flap around in the breeze."

Economic forecasting has been difficult since the recession, Colgan said. As a forecaster, he said, he's felt like Charlie Brown trying to kick the football with Lucy being the placeholder in the "Peanuts" comic strip. Every time Charlie Brown tries to make the kick, Lucy pulls the ball out from underneath him.

Like Charlie Brown missing the ball, Colgan said, he's missed the mark on his economic forecast for the past three years.

"This is pretty much how the economy's been working every year," he said. "We've been saying the economy's going to finally get going and every year something happens to keep the economy from kicking into higher gear."