There are some bright spots in Maine’s economy: Home sales are improving. Unemployment is shrinking. More seafood is moving through the Portland Fish Exchange. By metrics like those, Maine’s economic health is starting to show promise.

But look closer, and Maine has farther to go before any real economic recovery occurs — and much of the improvement depends on the nation’s fiscal health and public policy, according to some economists.

“Until the whole national train gets moving fast enough, we won’t get pulled along on the state level,” said Charles Colgan, professor of public policy and management at the University of Southern Maine’s Muskie School of Public Service. “We’re not big enough or leading enough in any service industry to pull the state economy out of problems on our own.”

For every potential bright spot in the state’s economy, there’s a flip side.

Real estate is often a leading indicator of an economic recovery, as buyers take advantage of low interest rates and the glut of available homes on the market, and people who had been living with family during the recession now can afford to move out on their own.

In November, sales of existing single-family homes surged 23.6 percent over the previous year. That increase built on a similar sales jump of 24.6 percent in October and gains seen throughout 2012.


The increase in housing demand hasn’t moved the needle much on median home prices. In Maine, the median sale price fell from a high of $201,000 in April 2007 to $152,000 in January 2009. The median sale price increased to $172,250 in November, up 1.9 percent from a year ago but still below the peak.

“Housing sales are up, and there’s a slight increase in price,” said Joel Johnson, a policy analyst for the Maine Center for Economic Policy. “But dig a little deeper, and it’s a mixed bag. Mortgage delinquencies are still high and foreclosures are still high. Overall, I’m not that optimistic.”

Meanwhile, construction of new homes in southern Maine jumped 35 percent in the first nine months of 2012, a rebound from last year when housing starts in the region fell to a 20-year low, according to Construction Data New England.

Although builders welcomed the new projects, they cautioned that the figures reflect construction in prime locations in southern coastal towns, and warned that new construction in the rest of the state remains stagnant. Plus, the number of new-home permits in southern Maine is still well below pre-recession levels, and last year’s growth could seem healthy only in comparison to the depressed numbers in 2011.

“If you look hard enough, you can find certain economic indicators that show signs of recovery,” Johnson said. “But to me, I’m more concerned about if and when a recovery does get going — who will be left behind and who will be helped? Will it be a broad-based recovery?”

For example, Maine’s unemployment rate was 7.2 percent in November, down slightly from 7.4 percent in October and little changed from 7.1 percent a year earlier. The statewide unemployment rate has remained relatively flat since January, when it stood at 7.0 percent, according the state Department of Labor.


Although Maine’s unemployment rate is better than the national rate of 7.7 percent, the Maine rate does not take into account those who have dropped out of the work force and given up looking for work. About 51,300 Mainers were unemployed in November, but Johnson estimated at least another 60,000 have part-time jobs and want more work, or have stopped looking.

Maine also still lags the nation in wages. The median household income in Maine rose to $46,933 in 2010, the most recent year for which data was available, from $37,240 in 2000. But the median household income in the state lags the national figure of $50,831 in 2010, according to the U.S. Census Bureau.

The U.S. has recovered almost two-thirds of the jobs lost during the recession, but Maine has recovered only 17 percent, Colgan said.

Sectors such as health care, education, professional and business services, and leisure and hospitality have showed gains, but state and local government jobs have dropped, economists said. Southern Maine is struggling from the closure of the Brunswick Naval Air Station in 2011 and the resulting ripple effect on local businesses as about 7,000 people left the area, according to the state Department of Labor.

Colgan expects Maine’s economy will lag the U.S. employment recovery by more than a year because the state is not well-positioned in growing industries such as business and professional services or manufacturing.

For the third consecutive year, Maine ranked No. 50 in Forbes’ seventh annual “Best States for Business.” Forbes cited problems such as the state’s high corporate tax burden — the second-highest in the country — as well as high energy costs and the oldest state population, with a median age of 42.


Colgan expects Maine to recover to its pre-recession employment level of 620,700 by the end of 2015.

Despite gains in some sectors, Maine’s manufacturing industry stands in worse shape now than during the worst quarter of the recession. The woes in the sector will be compounded by the closing of Hostess Brands’ bakery in Biddeford, Colgan said. Hostess directly employed 500 workers in Maine and could account for another 200 jobs indirectly.

Another big employer, fine stationery company William Arthur in Kennebunk, will leave in 2013. The company, which agreed in November to be acquired by Crane & Co., employs about 270 designers, artists, skilled craftspeople and customer service professionals. It is the second-largest employer in Kennebunk, behind Corning Inc.

For even the most Maine-centric economic indicators, there are more mixed measures.

The total amount of fish sold through the Portland Fish Exchange rose to more than 5.3 million pounds for 2012, up from 4.8 million pounds a year ago. Still, that’s down from almost 8.1 million pounds in 2007.

For the lobster catch, 2012 could surpass the record total of more than 100 million pounds in 2011. The official totals will be released in February. Yet, even with the record catch there’s a flip side: Wholesale prices in the peak of the summer fell to the lowest level in 30 years.


“There’s no question we’re in very unpredictable economic times,” said John Hathaway, president of processor Shucks Maine Lobster. “But there’s a real opportunity for us to gain market share with a bigger catch. Now is the time for us to be keeping jobs in Maine and stop shipping lobster to Canada, and for us to market Maine lobster more strongly around the U.S. and around the world.”

Staff Writer Jessica Hall can be contacted at 791-6316 or at:

[email protected]


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