Report: NE economy to lag through 2011
New England's economic gains will continue to trail the nation's growth over the next four-and-a-half years, and the region's housing prices will keep declining through early next year, a regional economic forecast organization predicted today.
The New England Economic Partnership said New Hampshire and Connecticut are the only states in the region expected to exceed the nation by certain measures of economic performance during a forecast period running through 2011.
New Hampshire's economy is expected to have the region's strongest economy, with the value of the state's goods and services keeping pace with the nation's gross product growth rate, and job growth forecast to slightly exceed the nation's. Connecticut is expected to exceed the national growth rate for personal income.
The other four New England states will slightly lag the nation by most economic measures through 2011, according to the latest twice-a-year forecast prepared for the economic organization's spring conference in Boston today.
The value of New England's products and services is expected to post growth averaging 2.6% per year during a forecast period through 2011, compared with the 2.9% growth rate forecast for the nation, according to the forecast by a panel of economists.
Growth in total employment is expected to average 0.9% per year in New England, below the national average of 1.2%. Regional per capita income is forecast at 2.3% per year, compared with the nation's 2.5%.
Those trends are in line with economic data from recent years that have shown New England lagging the nation, and trailing far behind fast-growing regions such as the South and Southwest. After eight consecutive quarters of declines beginning during a recession in 2001, the number of jobs in New England finally began to increase in the second quarter of 2003.
The housing slump that began to ripple across much of the nation's housing market last year has hit especially hard in New England, and isn't expected to go away soon.
The forecast organization said it expects median housing prices in New England to decline through the second quarter of next year, with the steepest price declines expected in the final three quarters of this year. A slow recovery is expected beginning in mid-2008, but the region's housing prices aren't expected to return to their historic pre-slump peak until the middle of 2010.
By the time the slump ends, New England's median housing prices are expected to drop 12% from their pre-slump peak, bigger than the more than 8% decline forecast for the nation by Moody's Economy.com, an economic forecasting company.
"The housing price decline in the region is significant, but the decline is not expected to be as pronounced as the decline in the last housing recession in the late 1980s and early 1990s," said Ross Gittell, the organization's forecast manager and a professor at the University of New Hampshire.
Michael Goodman, the forecast organization's president and a University of Massachusetts economist, said efforts to make New England's housing more affordable shouldn't cease just because prices have declined.
"Housing production across much of New England is not expected to be adequate to meet demand in the years to come, and this market correction we are experiencing will make it even more difficult for developers," Goodman said. "This underscores the need for the development of prudent state policies to develop more affordable housing in New England."
The New England Economic Partnership is a 36-year-old nonprofit forecast organization with members from private industry, government and academia. (AP)
May 24, 2007