Maine Trails, April - May '11
Inside Cover
President's Message
Cover Story
What’s on their minds?
What’s slowing the recovery?
A strong bond

 

What’s slowing the recovery (and us) down?

USM economist Charles Colgan briefs MBTA on the long, slow recovery and urges Maine to address issues about funding of investment in public good

 
The title of economist Charles Colgan’s talk was “Maine Unemployment in the Great Recession and the (Not So Great) Recovery” at the March 10th Cumberland County Meeting. More than 100 MBTA members and friends gathered at the Portland Marriott in South Portland to learn what Colgan had to say about the near future of our long, slow recovery and what it means for the transportation industry. 
 
The meeting is one of several regional MBTA gatherings held every year which address current affairs and transportation topics. MBTA President Deborah Dunlap Avasthi brought the meeting to order and welcomed several special guests in the audience: Representative George Hogan (D-Old Orchard Beach); Representative Jane Eberle (D-South Portland); a large contingent of local officials including several representatives from the Greater Portland Council of Governments and PACTS (the Portland Area Comprehensive Transportation System).Dunlap Avasthi introduced Be Schonewald of Schonewald Engineering Associates, one of the newest members of the MBTA. Dunlap Avasthi also lauded the 2011 MBTA Membership Committee which has gotten off to a strong start for the year, thanks to the hard work of co-chairs Jack Sutton and Grant Maxwell.
 
When he got up to speak, Colgan was primed to answer all of the questions that were on MBTA members’ minds, including whether there was good news for Maine’s economy and how long it would be before the state could expect to return to the level of prosperity it enjoyed during the mid-2000s.
 
Colgan, by his own admission, had positive news for the business and community leaders gathered. The talk at the MBTA Cumberland County meeting was his third speech to the MBTA in as many years, and one could almost hear the collective sigh of relief as Colgan began to talk: “Sure, I do have good news,” said Colgan. “But I don’t have all good news.”
 
The second question on everyone’s mind, Colgan guessed, was “How long?” That is: how long will it be until Maine recovers to pre-recession levels of economic activity and employment? That question, he admitted, was more difficult to answer, because recovery from this recession has been challenged by what he called “significant risks” and atypical growth patterns.
 
“Two-thousand-and-ten turned out to be very rough,” said Colgan. He was referring to his speech a year earlier that had forecast a somewhat rosier picture for the recovery than eventually played out over the year. Colgan displayed a series of slides detailing different aspects of the economy: GDP growth; the effects of the federal stimulus spending on the state’s economy; an increase in the average hours worked in 2010; and rising corporate profit levels. While all of those indicators pointed to a recovery, Colgan said that job growth has remained stubbornly stagnant throughout the past 12 months.
 
The good news Colgan had to offer included a backward glance at the past two years that showed Maine had weathered the recession better than many areas of the country. With just a 5 percent drop in employment in Maine, job loss has not been as severe as the recession of 1990-1991. And things appear to be improving, though Colgan remains skeptical of the numbers.
 
Just hours before MBTA members gathered in South Portland, new Maine employment figures were released for January showing an increase of 7,100 jobs in January – the largest monthly gain ever recorded in Maine.
 
Colgan said he suspected that job figures, while improving, likely had been inflated by a number of the unemployed becoming discouraged and dropping out of the job market. He said he expected the recovery to continue, but slowly, and predicted that it could be 2014 before Maine would see pre-recession levels of employment.
 
He similarly predicted that it would take until 2014 for gas tax revenues to recover and provided a bleak view of the buying power of those revenues – because the tax has not been able to keep up with inflation.
 
“In real dollars, we have made no real progress in investing in our transportation system,” said Colgan. He said that kind of underinvestment is at the heart of the nation’s faltering economy. Colgan warned that we need to address looming issues – including paying for essentials such as infrastructure and health care – or the nation will face serious decline in its potential to weather economic change like we have seen during the past several years.
 
“This is a bigger problem than the economy. This gets to the heart of who we are,” said Colgan.
 
FMI: The MBTA hosts several regional forums discussion transportation, the economy and trade throughout the year. To learn more, please visit mbtaonline.org.
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