A strong economic recovery in Maine could start in the middle of next year, but that depends on how the state and country manage the coronavirus pandemic, according to the latest annual economic outlook report from Colby College.

“If you want to fix the economy, you have to get a handle on the pandemic,” said Michael Donihue, an economics professor at the Waterville college.

Employment, income and economic production in Maine are expected to rebound next year, and some parts of the state will come close to recovering massive job losses by 2022, according to the outlook.

But that assumes the pandemic can be controlled in the United States, the vaccination campaign is successful, and substantial federal relief is provided to small businesses, workers and local and state governments.

“If help doesn’t come from Washington, that is what is going to hamstring us coming into the recovery,” Donihue said.

The Colby Economic Outlook has been produced annually for more than 30 years. This year’s report was compiled by six students under Donihue’s supervision. The Maine section of the report was based on four economic measures –  total retail sales, total employment, Maine Turnpike traffic and real personal income – that are then run through a predictive model. Researchers also examined county-level employment trends to estimate where in the state the job market will rebound fastest.

Maine’s economy is positioned to rebound next year and reach at or above pre-pandemic performance in 2022, according to the outlook. That analysis relies on conditions that allow the state’s massive tourism and hospitality industry to bounce back after out-of-state travel restrictions, event cancellations and the economic downturn delivered one of the worst tourist seasons in recent memory.

Those who could have afforded to may have put off a trip this year, but they might be ready to visit Maine in 2021, leading to a spike in restaurant and lodging sales and a jump in employment by the middle of next year, according to the report.

“The 2020-2021 ski season will not help to bring in as many tourists as the state is used to, but hopefully by summer 2021 the restrictions will lift and there will start to be some tangible growth in the industry,” researchers wrote.

Job recovery could be uneven across the state, according to a county-level analysis. Employment will recover from dramatic job losses last spring, but remain below the pre-pandemic level in 2021 through 2022 in most counties, it predicts. Inland counties such as Oxford, Androscoggin and Aroostook could see further employment declines, while Franklin, Sagadahoc and Piscataquis counties could recover fully by the middle of 2021, according to Colby projections.

A recent surge of COVID-19 infections, hospitalizations and deaths in Maine and across the U.S. could slow economic recovery, Donihue said. The outlook warns that restrictions, another round of enforced business closures and insufficient vaccine distribution could trigger a double-dip recession. But government restrictions needn’t be that strict for the surge to have a negative impact if it leads to people being wary of going out in public and limiting their local spending, Donihue said.

“It doesn’t have to be a full-blown lockdown to have negative effects on the economy,” he said. “It might not just delay the recovery, it might affect the kinds of job opportunities that are going to come back. Those jobs might not be there because those firms were not able to survive. This is a really fragile situation we find ourselves in.”


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