Mainebiz

w w w. m a i n e b i z . b i z 17 Ja n ua r y 1 2 , 2 0 1 5 What's your forecast for jobs in the state? Rector: Maine will see private-sector employment growth in 2015 on the order of 6,000 – 7,000 jobs. Since we don't have the energy production that has been driving growth in places like North Dakota and Texas, most of our employment growth will come from service sector jobs — professional and business services and education and health care. Lawton: Slow, steady growth among the usual sus- pects — health care, business services, retail trade. Manufacturing could see accelerated growth if busi- nesses and educational institutions expand coopera- tive efforts to meet specific credentials. Colgan: Maine has about 10,000 jobs left to recover before we get back to pre-recession levels, and we should make it most of the way back by the end of 2015 or early 2016. But Maine is also at the leading edge of the labor shortages that will characterize the economy for the next several decades, and our ability to add jobs is becoming constrained. ere should be enough labor supply left from the pain- fully slow recovery to get us back to pre-recession levels but the forecast depends on getting at least some population growth. Reisman: Maine will add about 6,000 jobs (1%), mostly in business services, health care and a tour- ism and hospitality boomlet fueled by cheap gas. Johnson: Maine will add 6,000 jobs at most. Annual job growth may not match what we saw in 2014 for many years, which is sobering considering we still haven't recovered all the jobs we lost in the recession. In the short run, ongoing fiscal austerity at the federal level and the refusal by state policy- makers to maximize federal funding opportuni- ties will continue to be a drag on growth. In the longer run, our lack of population growth and our aging population limit aggregate growth, but per capita income and job opportunities matter most. Regardless, anti-immigrant rhetoric is not creating a welcoming environment for newcomers. For the housing market? Rector: e housing market should still see a pretty good year in 2015, but there are a few areas to keep an eye on. Interest rates are likely to start increasing this year, which will have an impact on the affordability of mortgages. ere are still prop- erties making their way through the foreclosure process — this process takes a very long time in Maine — and this inventory will continue to limit increases in sales prices. Southern and coastal areas of the state will continue to have the stronger real estate markets. Lawton: Shortages and rising prices in urban cen- ters, especially in the south where retiring boom- ers with equity and non-job income bid up prices in desirable places to live. In rural areas, we'll see continued price declines, with more people 'aging in place' [while] would-be retirees and downsizers won't be able to sell their homes for enough to pay for smaller units. Colgan: Median home prices are rising statewide, but existing home sales have slowed and new con- struction is barely growing. e state's population growth (currently effectively zero) lies at the heart of this, since the market overall has recovered fairly well. Next year may see a little growth in existing home sales and new construction over 2014. Reisman: Maine's underlying demographics, debt and growth anemia don't bode well for the hous- ing sector, but Maine leads, rather than shadows national sales and sales price measures. e Dodd- Frank financial regulation meant to prevent another mortgage bubble and too-big-to-fail bailout is ironically advantaging Wall Street over smaller regional banks. Johnson: is year, despite a 10% increase in home sales, home prices have fallen in nominal terms. As mortgage interest rates slowly rise and growth in jobs, wages, and population remains slow, it's hard to see how home prices increase much at all next year. Year-over-year sales growth will cool off, fall- ing below 10% in 2015. For energy and heating costs? Rector: Energy costs are a mixed bag in 2015. Crude oil prices have been plummeting recently and are likely to stay low for at least the first part of the year. is is good news for people heating with oil and anyone who needs to drive — heating oil and gasoline prices will stay low through the heat- ing season and possibly longer. However, electricity prices are due to spike this year both for businesses and residents. ose heating oil and gasoline savings may end up going to pay for increased electricity bills, limiting the funds households and businesses have for other purchases and investments. Lawton: Slow growth in the world economy and conflict within [the Organization of the Petroleum Exporting Countries, or OPEC,] will keep downward pressure on oil prices. Conflict over infrastructure building, both gas pipelines and electricity transmission lines will clog public utility dockets and keep Maine largely dependent on 'sticky' delivery systems that may lead to price spikes. Colgan: Energy markets are extraordinarily tur- bulent. Oil prices have plummeted and natural gas prices (and 'busbar' electricity prices) are set to rise because of severe supply constraints in the Northeast pipeline systems. is is just the oppo- site of what people were looking at just one or two years ago. e effects of energy price changes are thus likely to be highly contradictory, with gasoline bills falling and home heating/electricity bills rising. We've been so used to energy prices going either up or down that this new world of prices moving up and down simultaneously — and then perhaps reversing — is going to be very confusing. On net, the drop in oil prices will have more of a positive effect on Maine than the rise in natural gas and related prices will have a negative effect. Reisman: Electricity and natural gas prices will spike in 2015, partly because of EPA anti-coal, anti-carbon edicts and partly due to natural gas regulatory barriers erected by Democrats and climate change warriors. Oil will stay well below $100 a barrel, keeping gasoline, heating oil and propane relatively cheap. Cheap oil hurts the Russians and Iranians, and if prices stay below $80 per barrel, fracking and oil sands production will taper off. e environmental left will declare war on a Maine Public Utilities Commission appointed by LePage. Johnson: Oil and gasoline prices will stay relatively low through the first quarter of the year, but expect petroleum-based energy costs to continue to rise over the longer run. ese are finite resources that are getting harder and harder to extract. Jonathan Reisman Associate professor of economics and public policy, University of Maine Machias Charles Colgan Former professor of public policy and management, USM's Muskie School of Public Service Joel Johnson Economist, Maine Center for Economic Policy C o n t i n u e d o n f o l l ow i n g pa g e » Maine is becoming a state with more jobs than people, reversing its century-long status as a state with more people than jobs ... This is uncharted territory for Maine and the rest of northern New England. — Charles Colgan, former professor at USM's Muskie School of Public Service

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