The recession that began in Maine two years ago is over, says one of the state’s leading economists.

The worst is over for the rest of New England, too, but economists who attended the New England Economic Partnership meeting in Boston on Thursday said the recovery will be slow, with most of the region not returning to pre-recession job levels before the middle of 2013.

The partnership’s spring 2010 forecast says the region’s unemployment rate will continue rising, to a peak of 9.3 percent by the first quarter of 2011, because of a natural swelling of the labor force and the return of people who were previously too discouraged to seek work.

Rhode Island, the hardest-hit New England state, is expected to see its jobless rate peak at 12.9 percent by the end of this year. New Hampshire and Vermont could have the region’s lowest peaks, at 7.2 percent and 6.9 percent, respectively.

“I think the recession is over,” Charles Colgan, a professor and economist at the University of Southern Maine, said by phone as he drove back to Maine from Boston. “Now the question is: How long will it take before we get back to where we were before the recession?”

Most of the six New England states appear to be faring better in the recovery than the nation as a whole. The region is benefiting from growth in the professional and business services sector, in education and health services, and in high technology.

Economists said Massachusetts seems to be the state most “firmly on track” toward recovery.

Colgan, the head of Maine’s Economic Forecasting Commission, was selected to present the state’s economic outlook at Thursday’s meeting. Economists from the other New England states did the same.

Colgan predicts the recovery in Maine will take 13 quarters — lasting into the early part of 2013. He said Maine lost more than 30,000 jobs during the recession, which started here in February 2008.

“When the recession began, we were at 620,000 jobs (full- and part-time). Now we have 593,000 jobs,” with the recovery under way, Colgan said.

comparison, during the 2001 recession the state lost just 6,000 jobs. That means this has been the most severe recession in the last 25 years. In 1991, the state lost 32,000 jobs, according to Colgan.

He credited the state’s recovery to stricter federal fiscal policies, low interest rates and the government’s stimulus package.

“Despite the polls that suggest the people don’t give the government much credit, those changes (at the federal level) may have saved us from a repeat of the Great Depression,” he said.

But Colgan said he would not bet against more layoffs occurring, especially in state and local governments, especially if their traditional revenue sources continue declining.

“That’s going to be a big issue in Maine,” Colgan said. “I am forecasting no growth in state or local government for the next five years. Whether they continue to lose jobs is the big question.

“Everybody recognizes that the worst of it is over. But they also realize that the happy days are not here quite yet,” Colgan said.

Through the end of 2013, New Hampshire and Maine were projected to have the highest percentage growth in total employment in New England. Rhode Island was expected to have the third highest, but only because employment has fallen so precipitously there.

Leonard Lardaro, an economics professor at the University of Rhode Island, said the state is in a dire financial situation.

“The idea that somehow, if you had a severe recession you’re therefore going to have a very rapid recovery, I think is without basis when it comes to Rhode Island,” Lardaro said.

University of New Hampshire economist Ross Gittell said the forecast offers a mixed bag for politicians seeking re-election this fall.

“It’s not as bad as it could have been, but still there’s going to be a lot of questions about why the economy isn’t stronger and where were you when the economy went down and why didn’t you help prevent this?” Gittell said.

Maine’s next governor, who will not be an incumbent, will face a different challenge, said Colgan. The new governor will have to work with revenues that are comparable to 2004 levels.

Maine’s economy generally is starting to perk up. He said consumers are starting to buy, with retail sales on the rise. Housing prices are still low, which is good for buyers but not for sellers.

“Things are starting to look up. The recession was not quite as bad as I thought it would be,” Colgan said.


Staff Writer Dennis Hoey contributed to this report.


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