The New England Economic Partnership (NEEP) released the annual five-year economic forecast for the U.S. and New England recently at the fall conference held at the Federal Reserve Bank in Boston. The NEEP is a nonprofit economic forecasting organization that has been tracking the regional economy for more than 35 years. The forecast is measured by the gross regional product (GRP).
A panel of six economists from New England anticipate a significant recession with difficult challenges ahead for the New England economy. The broadening and deepening impact of the global credit crisis was cited as a major source of New England's current problems. The crisis now has extended from the housing market to construction, to the financial sector, to retail trade and beyond to other sectors of the regional economy.
During the forecast period, the New England region is expected to lose about 250,000 jobs or 3.6 percent of its employment. Total employment in the region is expected to decline through the remainder of the decade and then remain flat through 2011.
From peak to trough it is expected that there will be a 14-percent decline in the construction industry. According to Jim Haughty, chief economist for Reed Construction Data, the transportation industry had an increase from $1.7 billion in 2007 to $2.0 billion in 2008. The industry is expected to decline to $1.3 billion by 2009.
The sewer/water industry dropped by about 4 percent from $955 million in 2007 to $710 million in 2008. The industry is expected to decline to $360 million by 2009.
Non-residential building isn't expected to change drastically. The industry did $10 billion business in 2007, increased to $11 billion by 2008 and is expected to go back down to $10 billion by 2009.
Civil industries didn't change much from 2007 to 2008 staying at about $3 million. However, it is expected that the industry will drop to about $2 million by 2009.
Highway spending remained at about $3 billion for 2007 and 2008 but will drop to $1.8 billion in 2009.
Overall total spending went from $13.7 billion in 2007 to $14.9 billion in 2008 and will decline in 2009 to $12.4 billion.
Massachusetts — The economy has entered a recession that will last through the first half of next year, although job growth will not return until the middle of 2010. Construction will suffer the highest rate of job loss — losing more than 10 percent through the recession trough. One positive for the construction industry through is that Gov. Deval Patrick appropriated $124 million dollars in revenues from the licensing of three destination resort casinos to be built in Massachusetts. The resort casinos will create 20,000 permanent jobs and employ some tens of thousands of construction workers across the state.
New Hampshire — The state will enter the recessionary period stronger than the rest of New England as well as the nation. Unemployment rates in New Hampshire have remained below the U.S. average. Construction jobs will decline during the five years forecast period to -0.5 percent annual loss.
Rhode Island — Unemployment is forecasted to be 9.5 percent in 2009 and 10.2 percent in 2010. The unemployment rate will not be below 8 percent until 2012. The annual growth rate of real GDP will be 0.2 percent in 2009. In 2010 is it expected to grow by 5.4 percent. Construction employment is expected to decline by 19,600 in 2009 — a 5.8-percent decline compared to 2008. Construction employment will rise by 200 jobs in 2010 and by 400 jobs in 2011.
Vermont — Payroll jobs will decline through the second quarter of 2010 followed by a gradual recovery. Construction jobs are expected to decline by -1.9 percent a year for the next five years. In his 2009 budget request, Gov. Jim Douglas asked for $424.8 million — a 4-percent increase over 2008 - for transportation. Gross State Product (GSP) will rebound and recover at a slightly slower pace than New England as a whole from 2009 to 2010.
Maine — The forecast shows a decline of employment well into the third quarter of 2010 with construction accounting for 18 percent of the job loss. The closing of the Naval Air Station in Brunswick during the forecast period, will result in the major out migration of military personnel and their families in 2009 and 2010.
Connecticut — The state was late to feel broad job loss but the second phase of financial crisis is expected to hit hard. The state will be late to emerge from the recession with a peak unemployment rate of 8.3 percent in the second quarter of 2010. Jobs lost in the recession are unlikely to be regained until 2012 or beyond. In construction, there is an expected job loss of 6,900 in 2009. n
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