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Consensus Economic Forecasting Commission, Nov.2010
November 1, 2010
The Economics and Demographics Team provides staff support for the Consensus Economic Forecasting Commission (CEFC), an independent group of economists who forecast Maine's economy. The Commission convened on October 26, 2010, to revise its February 2010 forecast. This and past reports summarizing the Commission's findings are available at SPO’s CEFC webpage.
While national and state economic conditions have been improving over the past months, the rate of improvement has been slow. In August, Maine’s year-over-year economic activity index crossed over into positive territory for the first time since April 2008. However, consumer sentiment remains weak and some states that had been seeing improvement are facing renewed declines. Personal income has been slow to recover, but corporate profits have been increasing significantly this year. While home sales experienced a temporary boost from the homebuyer credit, they have dropped off again following the expiration of that credit.
The October forecast reflects the slowing pace of the national and state economic recovery. The revised forecast has slightly upgraded its expectations for wage and salary employment and personal income in 2010, while reducing its expectations for growth in 2011 for wage and salary employment and the Consumer Price Index. Wage and salary employment is expected to begin slowly gaining ground in the first quarter of 2011, with more rapid gains expected in 2012 and 2013. Personal income growth is generally expected to be somewhat better than previously forecast, particularly in 2010, led by growth in wages and salaries, proprietors’ income, and transfer payments.
The commission also made slight upward revisions in 2012 and 2013 to its forecast of Consumer Price Index (CPI), although 2011 was revised slightly downwards (from 2.0% to 1.5%). This reflects the expectation that there will be no sustained inflationary pressures in the economy for some time.
The Commission convened on October 26, 2010, to revise its February 2010 forecast.