A New Great Depression in Rural Maine

July 31, 2017 by
James Myall

James Myall, Policy Analyst

New data released by the US Bureau of Economic Analysis provide more evidence of Maine’s lackluster economy, and the failure of policies pursued by Governor LePage and his allies. In the first quarter of 2017, Maine’s economy saw no real growth. Zero.  That was the lowest rate in New England, and the seventh-worst performance of any state. These new data are just the latest in a series of indicators that demonstrate just how much of a failure LePage’s economic legacy will be, especially for rural Maine. 

Economic growth is not like the weather. Lawmakers are not powerless to affect change – to encourage growth, and ensure that its gains are shared fairly. Governor LePage and his legislative allies have held Maine’s economy back by favoring wealthy Mainers over hardworking families, and opposing investments in our infrastructure, and our education system. The mantra of small government has not only hurt working Mainers, but also stymied the state’s job growth. The governor and his administration have even turned away nearly $2 billion in outside funding that would have stimulated our economy. The results of those disastrous policies are becoming increasingly clear. 

Source: US Bureau of Economic Analysis. New England data include data for Maine.  

Maine’s economy is still smaller, in real terms, than it was in 2006. The state has seen more than a decade of lost economic growth, even as the nation and our New England neighbors have recovered from the Recession and continued to grow their economies. Maine’s real Gross Domestic Product (GDP) is still 1% below its pre-Recession high in the second quarter of 2006.  In contrast, New England’s total real GDP is 8% higher, and national GDP is 13% higher. When the economy is stagnant this long, there’s little room for wage growth, or job creation, and state revenues struggle to keep pace with need. 

To make matters worse, any economic growth Maine has seen has been concentrated in the southeastern portion of the state. In the Portland-South Portland Metropolitan Area (which the BEA defines as all of York, Cumberland and Sagadahoc Counties), GDP has bounced along somewhat unsteadily, but is at least 2% above the 2006 high-water mark. In contrast, the economy in the rest of Maine entered a tailspin in 2006 from which it is just beginning to pull up. Real Gross Domestic Product in this area is a full 5% below 2006 levels. 

Source: US Bureau of Economic Analysis. The BEA defines the Portland-South Portland Metropolitan Statistical Area as Cumberland, Sagadahoc, and York Counties.

 The economy’s nosedive in rural Maine is so steep and deep that it represents an economic depression for the region. Economists typically define a recession as two consecutive quarters of real GDP decline, and a depression as four consecutive quarters of decline. The BEA does not produce quarterly GDP estimates below the state level, but the annual estimates imply that outside the Portland-South Portland Metro area, Maine has seen a very prolonged recession, resulting in seven years of declining economic growth. By way of contrast, the Great Depression of 1929 resulted in just four years of consecutive GDP losses. 

Source: US Bureau of Economic Analysis.

These bleak GDP data show that Maine still has a long way to go to recover from the recession, and that rural Maine is being left behind. The majority of the state’s population still lives outside the Portland-South Portland area, but people in these areas have been excluded from almost all the economic growth in recent years. Workers need good-paying jobs to replace the many losses in the pulp and paper industries, opportunities to retrain with new skills, and families need to experience real wage growth for the first time in a decade.   

The recipe for economic growth is clear. All Maine children need to benefit from a world-class education system. Mainers need to be able to go to college debt-free. The state must attract and retain young talent in any way it can, including helping with the burden of student debt. Mainers need affordable health care to be at their most productive, and the security of being able to take family leave to care for their loved ones.  

Governor LePage’s ideology and policy decisions have prolonged an economic recession into a new great depression for rural Maine. It will be up to the next governor and legislature, and the voters who elect them, to set an agenda which will repair the damage and breathe new life into this part of the state.  

2 Responses to “A New Great Depression in Rural Maine”
  1. stuart dexter says:

    I would like to know what items that determine economic growth. I don’t see this gloom and doom economic view. Living in the Bangor area things look good to me. Restaurants are expanding and new one appear. Everyone is shopping on Amazon. Medical facilities and doctors are busy. Everyone seem to be getting a wellness visit for a 15 minute chat or 30 minute chat that the government pays for. Non profits are providing food and shelter. Local towns are providing jobs for people in the town offices. The auto dealers and doing well selling new and used cars. Fishermen are having a good year along with the tourist business. Education institutions appear to be running at full capacity.

    Let me see how the economic growth is computed. Please point out the problem areas.

    Thanks

  2. Joe says:

    If the governor would release and accept the funding that was/could be for the bottommost people in the state economically speaking, there’d probably be a noticable turn around. When people can get the assistance they need to get back on their feet, most eventually DO get back on their feet and OFF of the assistance. That means Mainecare and other programs like mental health and substance abuse services, SNAP, EBT, TANF, etc.

    I’d love to see LePage’s face after he had some severe medical issue when he’s told the services he needs are only available for 150% of HIS monthly income for the next SEVERAL months. Then he might, just maybe, understand why people need things like Mainecare to get by. Or, God forbid, if that same scenario was to happen to one of his children or grandchildren.

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