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Consensus Economic Forecasting Commission, Nov. 2012
November 1, 2012
The Office of Policy and Management 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 25, 2012, to revise its February 2012 forecast.
National and state economic indicators suggest little improvement in economic conditions since the CEFC met in February 2012. Maine’s coincident economic activity index was unchanged in the three months ending in August and remains below pre-recession levels.
Uncertainty stemming from the “fiscal cliff” has continued to restrain economic growth in recent months. The “fiscal cliff” is a major fiscal tightening that includes the expiry of the Bush tax cuts, the payroll tax cut, emergency unemployment insurance benefits, and depreciation incentives as well as the sequester spending cuts, for a cliff estimated to be worth 3.0% of GDP nationally. The CEFC assumes that there will be a constructive solution reached by the new Congress and president preventing any extensive deterioration of economic conditions. Given the severe impact to the economy if a solution is not successfully reached, the CEFC will reevaluate their forecast in the first quarter of calendar year 2013 in response to actual policy decisions at the federal level.
Wage and salary employment growth was revised upwards slightly for 2012 and slightly downwards for 2013-2015 to reflect more robust current-year employment growth and longer-term structural workforce challenges, respectively. Personal income growth was revised upwards for 2012 in part to reflect the stronger employment growth and in 2013 to reflect increased dividends, interest and rent income, while 2014 and 2015 were revised downwards. Inflation, as measured by the Consumer Price Index (CPI), was revised upwards for 2012 and downwards for 2013-2015.
The Consensus Economic Forecasting Commission convened on October 25, 2012, to revise its February 2012 forecast.