The State of Maine’s Economy
Recently, I was appointed to the Maine Consensus Economic Forecasting Commission whose job it is to project the future state of Maine’s economy. The CEFC projection is then used to estimate future state revenue. As a result, I’ve been delving into all kinds of economic data to better understand the state of Maine’s economy from a short-term forecasting perspective.
One popular data series come from the Federal Reserve Bank of Philadelphia and is called the “State Coincident Index.” I’ve taken their historical data for all the New England states and created the chart below which shows some very interesting, if disturbing, trends for Maine:
- Maine had the second steepest decline in the index during the “Great Recession” following only behind Rhode Island.
- Maine currently has the worst “recovery” of all New England states with the economy is essentially moving sideways.
Other interesting trends:
- Massachusetts is the only state whose index value is higher today than before the “Great Recession.”
- New Hampshire has outgrown all New England state by a fairly wide margin since the index was re-calibrated to equal 100 in July, 1992.
- Vermont appears to be heading back into a recession . . . wonder if this has anything to do with their recent enactment of “universal healthcare?”
All this is happening just prior to a growing consensus that the U.S. economy is heading toward a double-dip recession. Anyone else see any interesting trends in this data?
Posted on Sep 06, 2011
When will "those in charge" understand - low overall taxes and limited regulation are what allow a business to rebound after a recession. This is what's being reflected in the graph. NH has no personal income and low business taxes, so it's rebounding faster. Maine has excessively high personal income and business taxes, so it's rebounding the least. Decrease the income tax burden and lighten the regulatory roadblocks and Maine will recover, too. And tax revenue will increase as more people are able to earn and pay (the lower) taxes.