Forecast for Maine's Economy

by Robert C. McMahon, Associate Professor of Economics, School of Business, University of Southern Maine

The following forecast of the Maine economy and population were prepared using an econometric model developed for CBER by Regional Economic Models, Inc. (REMI) of Amherst, Mass. Significant input was received from Dr. Charles Colgan of USM's Public Policy and Management program. Funding for this year's forecast was provided in part by the U.S. Department of Commerce's Economic Development Administration under the University Research Center Program.

Our forecast calls for continued modest growth of both economic activity and population. The value added to the economy by all sectors will grow in the next ten years. This is a result of the combined effects of increased productivity and expansion of the labor force. Interestingly, the value added in manufacturing will grow while the number of manufacturing workers declines. This is the result of considerable improvements in manufacturing productivity. Over the next ten years the service industry will show the largest relative gains in the state's output while the construction industry will show the smallest. The other sectors increased in value added within the range of 13 % to 21%.

Overall, employment will increase by almost 9% over the next ten years. In terms of relative increase, the service sector and the finance, insurance, and real estate (FIRE) sector will be the most important growth areas.

Per capital personal income (PCPI), a measure of average well being, will continue to rise but will remain below the New England average. For 1995, PCPI in Maine was $20,527, the lowest in New England and slightly below that of Vermont.