Top Maine Economist Delivers Optimistic 2011 Forecast

Despite the news on Fairchild Semiconductor today, a leading state economist foresees sustained job growth for Maine in the coming year. In his annual forecast of the state economy, Charles Colgan of the University of Southern Maine's Muskie Insitute of Public Service says jobs will be bolstered in part by federally approved tax cuts, and will grow by about 1 percent over the course of 2011.


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Colgan says Maine can expect to see the creation of about 6,000 new jobs in the coming year, and that job growth will accelerate over the following two years. "Basically I'm going to return to where I was a year ago and suggest that Maine employment growth at about 1.2 percent, about 3 percent in 2012, and the same in 2013."

Colgan, who delivered his forecast at USM's Portland campus, says Maine won't see a return to pre-recession unemployment levels for at least another two years. "If 2011 turns out to be better than I just described because of the payroll tax cut, we could get back to our pre-recession level probably in mid-2013, but we're looking still at 2 to 3 more years before we're back to where we were in 2008."

Colgan says job sectors that are not likely to recover as well by 2014 are construction, manufacturing, retail trade, information, finance and government.

"The only sectors that will get back are the ones that we're going to rely on: health care, leisure and hospitality and professional and business services. Professional and business services is pretty much everything that gets done in Portland and urban areas. Professional and business services is now, along with health care, and to some extent leisure and hospitality, are now the drivers of job growth in Maine. And professional and business services is a really key one because it tends to be, now, the high-wage, high-skilled jobs."

Colgan says job growth in 2010 would have been stronger if not for the European debt crisis, which shook confidence. And he warns that continued problems in Europe and other "heavy duty risks" could put a damper on his 2011 estimates. Still, he's optimistic overall.

"One final piece of good news: Naval Air Station Brunswick closes May 2011, it will be turned over to civilian control completely. It is now largely closed, you can go up to Naval Air Station Brunswick and drive around and all you have to do is show a picture ID at the gate and you can drive anywhere you want. It's now open for business and they have secured their first private sector tenant, Kestrel Aviation, which will be doing maintenance repair and overhaul on aircraft."

An information technology company and community college have also announced plans to locate at the former Naval Air Station site. Colgan previously estimated the base will likely employ 2,000 to 3,000 people within two decades, but the numbers could be much higher.