N.E. states vary in financial well-being
Boston Business Journal - by Jim Miara Journal Staff
During the past six years, the New England economy has added 695,000 jobs, or 95 percent of the jobs lost during the last recession, and the forecast calls for growth at a "steady and healthy pace" to end of the millennium and beyond, according to regional economists.
At last week's fall outlook conference of the New England Economic Project, a nonprofit forecasting group, regional economists said the six-state region continues to grow at an annual rate of 3.8 percent this year, slightly faster than the 3.4 percent projected for the national economy. What's more, the New England economy will grow at a faster pace than the national economy through 2001.
The economic forecasters noted that the region's expansion might be constrained by its shrinking labor pool, but even that has a silver lining.
"This is not necessarily undesirable," said Alan Clayton-Matthews, assistant professor at the University of Massachusetts at Boston, who presented the regional overview. "A tight labor market isn't bad as long as wage and price pressures do not lead to the type of speculation witnessed at the end of the last decade."
And there are no indications that's happening, he said.
Inflation is expected to rise from 3.1 percent this year to 3.7 percent by 1999, then drop to 3.3 percent by 2000 and remain at that level through 2001, the forecasters said.
Economic growth varies from state to state, with New Hampshire leading the way and Rhode Island trailing the pack. Rhode Island's employment continued to grow, but economists said many of the jobs are located in Massachusetts and Connecticut.
NEEP forecasters provided a state-by-state analysis of the region's economy.
Connecticut
Connecticut, more than any other New England state, has had problems recovering from the recession. Defense cutbacks, and insurance industry consolidation removed the state's economic underpinnings, and replacements have been hard to find. But this year, conditions have improved markedly in the "Nutmeg State."
While banking, insurance, defense, utilities and aerospace will continue to shed jobs, they will be replaced by openings in such fields as business services, health care, retail, wholesale and construction, said Edward Deak, professor of economics at Fairfield University, Fairfield, Conn.
Foxwoods Resort & Casino has become a major employer in the state, and it is expected to add more than 1000 jobs by 2001. "But there's some question about the casino's ability to continue its expansion," said Deak. Over the next four years, Deak said, "state employment, income and expenditure-related indicators should continue to show respectable annual growth."
Maine
While Maine continues to lag the region in its economic growth rate, "1997 is shaping up to be a much better year for the economy than was 1996," said Charles Colgan, associate professor of economics at the University of Southern Maine.
The outlook for Maine over the next four years is a pattern of relatively slow growth, as the economy "shows no sign of developing a sufficient concentration of growth in any sector large enough to pull the state's economy ahead of either New England or the United States," said Colgan.
Nevertheless, the finance, insurance and real estate (FIRE) sector is showing some strength in the state. Telemarketing centers for credit-card sales have sprouted in Belfast as well as in Western Maine, which is good news for a region that needs an economic shot in the arm.
"The financial industries promise to be an increasingly important part of the Maine economy, but whether the industries will move beyond the back room operations is uncertain," said Colgan.
Massachusetts
Employment in the Bay State continued to grow at a 2-percent pace during 1997, a rate that has been relatively constant since 1993. The distribution of job growth was broadly based, with almost every major sector adding jobs through the year. One exception was the retail sector which suffered because of the near-simultaneous closings of such huge retail outlets as Grossman's, Somerville Lumber, Lechmere and Woolworth's.
Although earlier forecasts predicted a tightening in the labor market, it has not happened this year. "Workers have been coming out of the woodwork," said Richard DeKayser, chief economist at BankBoston Corp.
DeKayser warned that Massachusetts, with its high concentration of financial institutions, could suffer as the result of a major stock market correction. But a larger threat, he said, comes from the continuing consolidation trend. Out-of-region banks are buying up small and midsize Massachusetts mutual funds, and it is not clear whether they will be relocated out of state.
New Hampshire
New Hampshire is booming. The unemployment rate is 2.6 percent, about half the national rate, yet wages are increasing at the same pace as the national economy, about 3 percent to 4 percent annually. Three New Hampshire cities, Nashua, Portsmouth and Manchester, are in the top 10 of Money magazine's annual "Best Places to Live" survey, and the state continues to win awards based on quality-of-life factors.
The downside is employers are having a hard time finding workers, and early signs of 1980s excesses are appearing, reported Dennis Delay, senior economist at Public Service of New Hampshire.
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