The Consensus Economic Forecasting Commission (CEFC) on April 1 revised its economic outlook for Maine, signaling slower growth ahead through 2029 and highlighting elevated risks from fiscal and trade policies.
April’s update marks a shift from the Commission’s November 2024 forecast, showing weaker projections for employment, income growth, and inflation trends. The CEFC cited significant uncertainty around “economic policy, government spending, geopolitical tensions, and consumer sentiment.” While the changes are marginal across the board, the overall tone is downbeat.
Non-farm employment grew 1.0 percent in 2024, slightly exceeding the November forecast of 0.8 percent. However, the Commission revised its overall employment growth forecast downward for future years. It now anticipates only 0.2 percent growth in 2025 (down from 0.4 percent), 0.1 percent in 2026 (down from 0.2 percent), and 0.0 percent growth from 2027 through 2029.
“This assessment of slower growth reflects both revised projections from Moody’s Analytics and S&P as well as broad economic uncertainty and ongoing demographic constraints,” the report stated.
By demographic constraints, the economists may be talking about Maine’s dismal birth rate of 8.3 births per thousand people in 2024. That’s about 21 percent below what’s considered the “replacement rate” for a population to naturally sustain itself. Coupled with rapid outmigration of any young people who can escape Maine, the demographic forecasts for Maine look bleak indeed.
Maine’s total personal income grew by 5.3 percent in 2024, in line with the November forecast. But projected growth for 2025 and 2026 was revised down from 4.4 percent to 4.1 percent.
The report did not mention the Mills Administration’s new one-percent tax on paychecks, which started on Jan. 1, as part of a Democratic initiative to force Maine workers to pay for a paid leave program.
(Source: CEFC April 1 Outlook Report)
The Commission also reduced its forecast for non-farm proprietors’ income growth in 2025 from 4.0 percent to 3.5 percent. Likewise, growth in dividends, interest, and rent was revised downward from 4.5 percent to 3.0 percent in both 2025 and 2026.
Inflation, as measured by the Consumer Price Index, came in higher than previously forecast at 3.0 percent in 2024. The Commission increased its inflation forecast for 2025 from 2.4 percent to 3.2 percent, and for 2026 from 2.3 percent to 2.8 percent.
The upward revisions “reflect the Commission’s assumption that inflation will increase in 2025 from current levels due to tariffs and the possibility of a global trade war,” before easing in later years.
The Commission specifically warned that “rapidly changing tariff policies are contributing to the possibility of a global trade war.” It also noted that “the federal government has entered into a period of significant fiscal austerity,” adding to economic uncertainty.
The report highlights that Maine may be particularly vulnerable to federal policy changes, including potential declines in Canadian tourism and reduced federal funding, due to its proximity and trading relationship with Canada.
The language about tariffs, trade wars, and Canadian tourism will likely provide Gov. Janet Mills and her allies at the newspapers with plausible cover to claim that any economic downturn in Maine is not the result of the progressive policies implemented since 2019 but is instead the fault of President Donald Trump’s unconventional policymaking.
While the report did not cover the introduction of new tax measures, it includes a cautionary note that “inflation growth remains elevated above target levels and will face upward pressure from tariffs,” which may lead to indirect tax burden increases. That’s because growth in inflation works as a stealthy tax on anyone, particularly the elderly, who have saved in U.S. dollars. Price inflation also causes an increase in sales taxes, as those tax rates are applied to the nominal dollar cost of goods and some services.
In contrast to the downward trend in economic projections, revenue expectations remained largely stable for the upcoming biennium. The Commission left its forecast unchanged for General Fund revenues in fiscal years 2026 and 2027.
“Revenue the state expects to be able to spend in fiscal years 2026 and 2027 remains consistent with the December 2024 forecast,” the Commission confirmed. That projection calls for -0.8% growth in FY26 and 2.7 percent in FY27.
That will be good news for Democratic lawmakers in the Maine House and Senate who just recently passed an $11.3 billion biennial budget that failed to fund MaineCare, Maine’s largest spending program, for fiscal year 2027. Lawmakers now need to come up with $300 million to $600 million in new taxes and revenues to fund the welfare program for 2027, as well as a host of smaller pet projects the left-wing power players have prioritized.
Stable revenue projections, even if the economy is looking grimmer for folks in the private sector, mean policy makers will have little reason to avoid hiking taxes and raising spending.
Although Democratic policymakers may be invigorated by the economic forecast, consumers outside of August remain timid about the prospects for Maine’s economy.
According to the survey, consumer sentiment indicators remain low, and small business confidence has declined.
“Consumers expect worsening personal finances, business conditions, unemployment, and inflation,” the Commission noted, citing recent survey data.
The report did not mention the new paid leave tax, which has extracted an additional one percent from the paychecks of Maine workers and applied a significant new paperwork burden to small business owners.
The Commission concluded by reaffirming that geopolitical tensions, fiscal austerity, the impacts of tariffs and demographic constraints continue to weigh heavily on Maine’s economic trajectory.
