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2015 Mid Year Maine Economy Update

Thursday, September 17th, 2015

A prominent Maine economist, Charles Colgan, gave an annual economic summary for 2014 and 2015 in his last Forecast Conference. Mr. Colgan was the highly regarded economist at the Muskie Institute of the University of Southern Maine for more than twenty years. His last economic forecast for the Maine economy was fair for 2015, but possibly improving in 2016. Some of his comments are paraphrased below. They were accompanied by selected charts and graphs that present an excellent overview of Maine’s immediate past and prospective performance.

  • Business is steady, and consumers are showing more confidence.
  • Southern Maine and coastal regions will continue to outperform the rest of the state.
  • Average hours work per worker has been increasing, indicating prospective job creation.
  • Corporate profits have been increasing, which should also drive investment in new jobs.
  • Consumption expenditures are shifting more toward services and away from goods.
  • Household debt burdens are declining with more conservative spending habits.
  • Home equity, still low despite market improvement, no longer fuels consumption.
  • The European debt crisis has a more negative impact on our economy than most realize.
  • Maine’s slower population growth results in fewer jobs needed for expanding labor force.
  • But, government employment continues to decline.
  • Job creation was flat through 2013 and will not reach pre-recession levels until 2016.
  • GDP is largely used for Medicare, Medicaid, Social Security and interest on debt.
  • Our primary short term problem is the need to generate revenue, then reduce spending.
  • Our primary long term problem is health care costs, with reform slow and at high cost.
  • Federal income tax reform will be revisited. A corporate payroll tax cut may help.
  • Climate change problems will be deemphasized by government over the short term.
  • Emphasis on development should be placed on the urban centers since populations there are increasing as rural areas continue a slow decline.
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