The economies of Maine’s three metropolitan areas lagged significantly behind the nation and grew sluggishly in 2013, new statistics show.

The U.S. Bureau of Economic Analysis said Tuesday that the total value of goods and services produced in the Portland metro area grew by just 0.7 percent last year, compared to a national average of 1.7 percent. Portland ranked 244th out of 381 metro areas in the percentage growth of its Gross Domestic Product, the BEA said.

Bangor and Lewiston-Auburn performed even worse. The Bangor metro area had an increase of just 0.1 percent in GDP. Bangor ranked 286th out of the 381 metro areas in the percentage growth of its GDP last year. And the growth in Lewiston-Auburn’s GDP matched Bangor’s at 0.1 percent in 2013.

The GDP, because it measures total output, is considered a much broader measure of economic performance than other statistics, such an unemployment rates or incomes. In figures released earlier this summer, the BEA said the state GDP grew 0.9 percent in 2013 and ranked 41st in growth for last year.

James Breece, an associate professor of economics at the University of Maine, said the figures, particularly for Portland, were an unwelcome surprise.

Breece said he thought the Portland region’s performance would be stronger, particularly because it has attracted a lot of young residents, countering Maine’s population ranking as the oldest in the nation.

“I expected to see mild growth, but not this mild,” Breece said.

Breece said he thought Bangor’s and Lewiston-Auburn’s GDP figures would come in below the national average, but he expected Portland’s economy would be more vibrant and at least approach the national average.

Factors that probably contributed to the slow growth include a skills gap, with employers in the state unable to find workers with the education and experience they need in today’s economy, he said. That could lead a firm to expand out of state, or raise costs due to higher salaries needed to attract workers from out of state with those necessary skills.

Breece said Maine businesses also deal with other costs above what competitors might face elsewhere, including higher utility costs and increased transportation costs.

Maine has also been hard hit over decades in manufacturing, with factories moving overseas. Manufacturing often leads economies out of a recession when companies call back laid-off employees, sometimes in large numbers.

Without that big push, all three Maine metro areas have struggled to bounce back from the 2008-09 recession.

Updated GDP figures show that the economy in Portland contracted by 1.7 percent in 2009, grew by 2.1 percent in 2010, declined again by 0.5 percent in 2011 and grew by 0.7 percent in 2012 and then matched that figure in 2013.

Bangor’s GDP declined 1.7 percent in 2009, by 0.9 percent in 2010 and by 1 percent in 2011. Its economy grew by 0.8 percent in 2012, but growth slowed to 0.1 percent in 2013.

In Lewiston-Auburn, the economy declined 2.5 percent in 2009, 0.6 percent in 2010 and 0.3 percent in 2011. The area’s economy grew by 1.3 percent in 2012 and 0.1 percent last year.

The BEA said Portland’s total GDP was $27.5 billion in 2013, making it the 88th largest metro economy in the country. Bangor’s GDP was $5.7 billion, 270th largest, and Lewiston-Auburn’s was $4 billion, 339th largest in the country.

Charles Lawton, the chief economist with Planning Decisions, a Maine consulting firm, said the state’s economy is missing a spark plug to kick the economy into gear.

Rather than some high-tech, high-growth industry, he said, Maine’s economy reflects a 20th-century economy.

“It’s low-tech versus high-tech,” he said, “like a company making high-resolution cameras versus a machine shop.”

He said the situation reflects an exodus of young workers from the state and that, in turn, limits entrepreneurship. With people leaving in their early 20s, or going to college out of state and not coming back with more advanced skills, he said, Maine doesn’t have the young population where ideas for startup companies thrive.

OTHER INDICATORS

Overall, Maine’s three biggest cities saw a decline in government spending over the five years of the analysis. The Portland area saw declines of 0.3 percent in 2009, 2.2 percent in 2010, 2.5 percent in 2011, 0.4 percent in 2012, and 2.4 percent in 2013.

Lewiston-Auburn saw declines of 2.2 percent in 2009, 1.1 percent in 2010, 2.3 percent in 2011, 0.3 percent in 2012, and 0.9 percent in 2013. Bangor’s numbers were similarly depressed with the exception of 2009, when it registered a 0.2 percent increase. In the other years, it showed declines of 1 percent in 2010, 2.7 percent in 2011, 0.8 percent in 2012, and 1.2 percent in 2013.

Although the BEA said that the finance, insurance, real estate, rental and leasing sector was the primary driver for what it termed “widespread growth” in metro GDPs across the country, in Maine the sector’s performance was mixed, with Bangor notching a decline.

In most metro areas, it said, that one economic sector accounted for about a quarter, or more, of the GDP growth last year. For example, in Williamsport, Pennsylvania, the BEA said, the GDP grew 3.7 percent and 3.5 percentage points of that were due to the finance, insurance, real estate, rental and leasing sector.

Royce Cross, the chief executive officer of Cross Insurance in Maine, said his industry directly follows employment growth. As companies add jobs, he said, more people are added to health insurance and workers’ compensation policies. Although he said his business is healthy, there hasn’t been a big burst of newly hired employees being added to policies.

That tells him that employment is lagging in Maine, Cross said, and the drop in the state’s unemployment rate might include a significant number of part-time employees who don’t qualify for benefits such as insurance.

Insurers also benefit from purchases reflecting a strong and growing economy, he said, such as houses and cars.

“In order for me to have a good year, I’ve got to have a strong economy,” he said. “In some places, they do well just to keep up (with demand).”

 


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