Fiscal Woes Seen Slowing New England Economy

New England's economy, which is struggling to recover as the U.S. economy remains weak, is hindered by looming federal and state fiscal crises, according to a management professor at the University of New Hampshire.

Ross Gittell was to release his fall 2010 economic forecast Wednesday at the New England Economic Partnership economic outlook conference in Boston.

"The looming federal and state fiscal crises present a dark shadow over the New England regional economic outlook," Gittell said.

He said the impact of the fiscal problems will first hit government employment and then affect other sectors of the economy, public services and infrastructure.

Employment in government is expected to fall 2 percent until the middle of next year, a loss of more than 21,000 jobs in New England, he said. The employment loss occurs at time when the region is limited in how it can absorb falling employment, he said.

Gittell forecasts that New England's economy will grow slowly for nine to 12 months and then pick up some strength. The region's overall economy is not expected to grow faster than 4 percent until the middle of 2011.

Massachusetts and New Hampshire are expected to have the strongest economies in the region and Rhode Island the weakest.

"Unlike previous recessions, during the great recession of 2008-09 the New England decline was less than (the) national decline," Gittell said.

His outlook, "Deficits as far as the Eye Can See: Seeking Solutions to Our National and State Fiscal Crises," was to be released at a meeting of the Federal Reserve Bank of Boston.