AUGUSTA — Only weeks after the global COVID-19 pandemic was declared, one economic study predicted that Maine would be the nation’s most vulnerable state to the economic fallout of the health crisis.

But a year and a half later, that hasn’t proved to be the case.

“Luckily, and because of a lot of good work from a lot of people around the state, that’s not true,” Heather Johnson, commissioner of the state Department of Economic and Community Development, said earlier this week.

Heather Johnson, commissioner of the Maine Department of Economic and Community Development, gives an update on the state’s economic recovery to the Kennebec Valley Chamber of Commerce.

The forecast by Oxford Economics cited Maine’s high percentage of older residents and its reliance on hospitality, tourism and retail trade among other factors as contributing to the dismal outlook.

But Johnson, who was talking about the state’s economic recovery Wednesday at the Chamber Connection put on by the Kennebec Valley Chamber of Commerce, said the state’s gross domestic product has grown, putting the state at about 33rd nationally.

“Nobody who has a competitive bone in their body thinks 33rd is where you want to be,” Johnson said via Zoom, “but it’s better than being in the low 40s, which is where we usually are.”


Johnson detailed how more than $200 million in federal recovery funds have been targeted to help businesses and industries damaged by the effects of the global pandemic, which includes the hospitality sector.

Johnson said while the state’s economy still has some key challenges to navigate, the state’s gross domestic product — the total value of finished goods and services produced — has recovered to exceed pre-pandemic levels after taking a steep dive in 2020.

Sales tax collections are also up, she said, and people are feeling a bit more comfortable about spending disposable income.

“We’re actually seeing investment in some new businesses, and we’re seeing new business startups grow,” she said.

That activity is coming from people who decided to start their own businesses instead of returning to work full-time.

That’s something Andrew Silsby, president and CEO of Kennebec Savings Bank, said he’s seeing — growth in new business account openings and a larger trend of strong deposit growth.


“At Kennebec Savings, probably a pretty good year of deposit growth would be $50 million, a really good year would be about $85 million,” Silsby said. “In 18 months, we’ve grown deposits by $350 million.”

Traditionally, he said, demand for loans has been higher than deposit activity. “When I say there’s a really a lot of money on the sidelines, there’s really a lot of money on the sidelines — more than we’ve ever seen before,” he said. “But I really want to see some of those dollars get invested back into businesses.”

Silsby acknowledged that not all businesses are faring equally well and for some hardship continues, but the elevated deposits are across the board for businesses large and small and personal accounts.

Among the concerns voiced at the presentation was the possibility of another shutdown, as the omicron variant of COVID-19 spreads across the United States.

Johnson urged people to stay aware of changing conditions and be concerned about what’s happening.

“When you have to call the National Guard to support your health care system, that’s never happened in my lifetime,” she said, referring to recent action by Gov. Janet Mills to assist overwhelmed hospitals.


But, she said, a shutdown isn’t likely. The protocols that the state put in place early on in the pandemic, including widespread shutdowns were developed because of a public health crisis that people weren’t able to protect themselves from or control. And the emergency powers granted to Mills that allowed those shutdowns to be declared have expired.

“Now we have more options,” she said. “We have vaccines, and we know a lot more about what’s happening. It gives people a chance to protect themselves and their families, and that changes the dynamic of personal accountability and options for protecting yourself.”

One of the impacts the pandemic has had on Maine is population growth, as people from other states with the option to work remotely have chosen to do so from Maine. While those increases won’t be captured by the latest census, Johnson said other indicators illustrate that growth, like the number of out-of-state driver’s licenses that are being converted to in-state driver’s licenses, which she said is the double-digit thousands of people.

That has led to concerns about housing, and whether people being recruited to work here will be able to find any place to live.

“I think the short and the long answer to that is yes,” Johnson said.

In the Maine Jobs and Recovery funding package, $50 million is targeted for workforce housing, she said, which can be used in a number of ways.

She cited the example of the Northern Forest Center in Millinocket, which put together funds from philanthropic and other sources to renovate and update some run-down houses it had bought. Those houses are now low market-rate homes.

“It’s meeting worker demand. I expect we’ll see more of that from the nonprofit world, and I expect that we’ll try to figure out how to help with that,” she said. “Where I am spending my time is this workforce housing piece, which is, if you need nurses, we need a place for nurses to live. If we need teachers, we’ve got to have a place for teachers to live near where they work. And we don’t have that in all of our markets right now.”

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