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Speaking Frankly: New England’s Economic Future. Fall Economic Outlook Conference November 20, 2008. New England Outlook. Ross Gittell VP and Forecast Manager New England Economic Partnership James R Carter Professor University of New Hampshire.
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Speaking Frankly: New England’s Economic Future Fall Economic Outlook Conference November 20, 2008
New England Outlook Ross Gittell VP and Forecast Manager New England Economic Partnership James R Carter Professor University of New Hampshire
A significant recession with difficult challenges over the full forecast period Global credit crisis and its after effects have pushed New England economy into recession. Two consecutive quarters of decline in regional gross product expected followed by weak economy through 2009. Declining employment in region (since early 2008). Forecasted to lose over 250,000 jobs by end of decline in 2010, or 3.6% of employment. Unemployment is expected to rise to highest rate since 1992, to over 8% in mid-2010. Housing price decline expected till 2010. Slow recovery expected...in housing, employment and overall regional economy.
Strong influence of the US Outlook on the New England Economic Outlook The macroeconomic drivers for NEEP’s Fall 2008 forecast for New England are from Moody’s economy.com’s “Housing Market Crash, Moderate Recession” forecast scenario that predicts a decline in national product through 2009 in US. In the NEEP forecasts and in the New England Outlook write-up all the US forecast comparison figures presented are from the “Moderate Recession” scenario provided by Moody’s Economy.com to NEEP in October 2008.
Real Per Capita Income: US and New England -- sharp drop occurring late 2008 with impact economy-wide
Change in Gross Product: US and New England 2008-2009 Decline followed by slow “recovery” through 2009 (annualized growth rates)
Recession forecast for New England “consistent” with previous recessions NEEP’s forecast is of a deeper and more prolonged recession than forecasted by some others. The employment decline forecast for the region is very close to the percentage decline in employment in the last recession in the early 2000s. It is less than employment decline in the early 1990s recession when the region lost nearly 10 percent of its employment base. In each of the last three recessions the percentage decline in employment in New England was more pronounced and more prolonged than the national average and this is forecast to be the case again in this recession.
Employment Decline in New England …expected till last half of 2010…slightly more pronounced and prolonged than US
Peak-to-Trough greatest declines expected in Trade and Manufacturing. Steepest % declines expected in Construction (14%), Finance (9%), Trade (7%)
Unemployment US and New England Expected to reach highest rate since early 1990s recession... Peak at over 8 percent
Only RI expected to have Peak Unemployment above US average. Vermont and NH expected to have lowest unemployment in region
Total Employment P-T Percentage Declines RI expected to be most impacted by recession in region. NH expected to be only state below US average decline
Slow employment recovery across the region…Most states expected to have below US average employment “recovery”
Housing Price Decline. Expected to be highest in RI and CT. Slightly below US average for the region, lowest in Vermont
Summary: New England Outlook By the end of forecast period region is expected to have 137,000 fewer jobs, 2% less, than beginning of 2008 Recession expected to be: (a) slightly more pronounced & prolonged in NE than US, (b) more pronounced & prolonged than early 2000s, (c) less pronounced than early 1990s. Recession not expected to spare any state in region. Rhode Island is the most deeply in recession now and expected to suffer the greatest peak-to-trough employment percent decline in the region. NH expected to have the lowest peak-to-trough decline. Biggest employment declines expected in Trade, Manufacturing, Prof. & Bus Services, Finance & Construction.