New England Economic Indicators

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The Federal Reserve Bank of Boston just released its October 2007 issue of their New England Economic Indicators. After looking over the data, I noticed several disturbing trends in Maine’s economy.
First, bankruptcies are up 109.3 percent from Q2 2006 to Q2 2007–the largest percentage jump in New England. The current level stands at 678 filings in Q2 2007.
Second, the percent change in nonagricultural employment is the slowest in New England at 0.5 percent from August 2006 to August 2007.
Third, growth in total private employment has reversed itself since hitting its peak of 515,200 in June 2007. It has since fallen to 512,700 in July 2007 and again to 511,800 in August 2007.
Fourth, on the other hand, government employment is up since June 2007 growing from 104,500 in June, to 105,300 in July, to 106,600 in August (the highest level since August 2006).
Fifth, the “shadow government” education and health services industries also continue to grow from 114,200 in August 2006 to 116,600 in August 2007.
Sixth, Maine’s unemployment in the last two months have moved above the national average–4.8 percent versus 4.6 percent.
Seventh, correspondingly to point six, the number unemployed has increased 31,700 in June to 34,100 in August while the Civilian Labor Force shrinks from 712,300 in June to 707,100 in August. The higher number of unemployed indicates that it is getting harder to find a job and the lower number in the Civilian Labor Force means people are dropping out of the labor force altogether. A duel sign of a weakening economy.
Eighth, Total Merchandise Exports are down from the recent peak of $718 million in the third quarter of 2006 to $619 million in the second quarter of 2007.
Finally, the total economic activity index has stalled since June at 147.5.
With the national economy on the brink of recession due to the lackluster housing market, it appears Maine’s economy may already be heading down the recessionary path. When the legislature reconvenes in January, the first order of business should be to pass a sizable tax cut in order to stimulate Maine’s economy in the short term and to boost economic competitiveness in the long term. In a recent report MHPC has laid out a plan of action to cut and reform income taxes by over $218 million–this would be a good start.