Mark Plourde, Maine Valuation Company

As we collectively gaze into our crystal ball to forecast future trends, the following information was compiled from various published resources to help identify some characteristics of the Maine economy.

Population Growth: Maine’s major damper on economic performance is that of slow population growth. Maine’s population grew by only 4.2% from 2000 to 2010.  More important is the loss of 55,173 people between the ages of 1 and 44 during this time period, while gaining 62,314 people over the age of 65. Maine now has the oldest median age in the country and the second smallest percentage of the population under the age of 18.

Employment/Unemployment: Seasonally adjusted at 3.5% Maine’s unemployment rate is below the national rate of 4.7%.  Maine’s net job growth (seasonally adjusted) was up 2,222 jobs from April 2016 with 654,953 employed, according to the State of Maine Center for Workforce Research and Information. Overall, the state employed 3,493 more than the previous March (2015), yet, Maine’s unemployment rate increased slightly from April, and decreased 1.1% since last May. It is recognized that employees may be dropping out of the workforce due to any number of factors such as retirement, migration, or the choice to stop seeking employment.  Nonetheless, as historically calculated, Maine’s unemployment rate has been below the national average throughout the economic downturn. As of January 2016, rates tended to be lower than the statewide average in southern and central counties and higher than average among eastern and northern counties. The western and northern counties in Maine were the hardest hit during the economic downturn, with sawmill and paper mills closing and high unemployment. The southern and central counties, home to the state’s largest metropolitan areas and a greater mix of industries, historically tend to have lower unemployment rates. On a positive note, all counties saw unemployment rates below the same time a year ago (January 2016). The top employers in Maine represent a variety of business and industries including: retail and wholesale grocers: Hannaford Bros. (#1), discount department stores: WalMart/Sam’s Club (#2), retail and manufacturing: LL Bean (#4), healthcare providers: Maine Health (#3), Eastern Maine Medical Center (#6), Maine General Medical Center (#7) and Central Maine Healthcare Corp (#9), shipbuilding: Bath Iron Works Corporation (#5), finance: TD Bank, N.A. (#10), and insurance: Unum Provident (#8). Health Care & Social Assistance and Government jobs account for 34% of jobs. Other industries include: production; transportation; construction & extraction; installation, maintenance & repair.

Personal Income: According to the U.S. Bureau of Economic Analysis, Maine’s per-capita personal income in 2014 was $40,745. This PCPI ranked 33rd in the United States at 88% of the national average, and was below all other New England states. Maine ranked 42nd in the U.S. in Total Personal Income in 2014, with a 3.1% increase since 2013, versus the national increase of 4.4%.   The Compound Annual Growth Rate over the period from 2004-2014 for Maine was 2.6% versus 3.9% for the United States.

Retail Sales: The table above shows the year over year change in taxable retail sales from 2013 to 2014. Retail sales grew by 3.73%, with all sectors reporting growth, most notably Auto, Restaurant, and Lodging with 6.63%, 4.68% and 4.61% growth rates, respectively. FMI - http://www.maine.gov/spo/economics/index.shtml

Maine Department of Labor: The Center for Workforce Research (CWRI) developed a new ten year workforce forecast for the period ending in 2024. The outlook is similar to the previous forecast to 2022, except that with two more years the advancing age structure of the population has more impact. CWRI expects that low unemployment and rising wages will spur rising rates of labor force participation among all age groups, but the total participation rate will decline as the age structure of the population continues to shift toward seniors. There is room for modest job growth in the next few years, but after 2019 rising numbers of retiring baby boomers are likely to be an overwhelming force, taking employment lower. For the full decade from 2014 to 2024 CWRI expects employment to grow and then decline with a net change of +5,000. The two monthly surveys have been providing diverging indications of employment growth during the recovery. The household survey indicates the workforce is contracting. It has provided similar indications in the two previous economic recoveries. The payroll survey indicates modest job growth continues. It provides a more reliable indication of trends over the last few years. Inflation-adjusted total wages paid in Maine are back to the pre-recession peak level in 2007 and average wages are rising at the fastest rate in more than a decade. This is partly due to a tighter, more competitive labor market and partly due to near zero inflation – in nominal dollars (what people are actually paid) the rise is modestly above previous years. It is too early to know if real wage growth will remain high when inflation returns, but less expensive oil has been good for Maine’s workforce.

Mark Plourde, MAI, is the managing partner of Maine Valuation Company, Gorham, Maine.