November 20, 2008 Economists predict difficult times in New England Play video

(Peter Howe, NECN) - The American worker continues to suffer. The Labor Department says new claims for unemployment rose last week to their highest level since 1992. So just how bad could it get? Economists from all six New England states have just put together their best projections for what happens through 2011 -- and, no, it's not good news.

"There's no sugarcoating it: The news today from the New England Economic Partnership forecast is clear: We're facing a very difficult road for 2009 and a good part of 2010,'' says Michael Goodman, who runs the University of Massachusetts Donahue Institute, which publishes economic and public policy research. "The wild card, and the worst news for the outlook, is the jobs situation, where approximately a quarter of a million jobs are predicted to be lost across New England over the next several years, about 135,000 of those jobs here in Massachusetts.''

The newest NEEP semiannual forecast predicts a recession that peaks in mid-2010. Unemployment rates are being projected to crest at 6.9 percent in Vermont, 7.4 percent in New Hampshire, around 8.5 percent in Massachusetts, Connecticut, and Maine, and a whopping 10.3 percent in Rhode Island, which faces the worst subprime mortgage real estate meltdown of all of the six states. New numbers released by the state Thursday showed Massachusetts heading that way -- unemployment up to 5.5 percent in October from 5.3 in September, and so far this year averaging half a percent higher

Mark Zandi of Moody's economy.com -- maybe the closest thing there is to a celebrity economist -- told NEEP members the scariest phase of the economic crisis seems to be past. "The panic has abated,'' Zandi said, referring to this fall's chain-of-dominoes collapses of major financial firms and the resulting $700 billion Wall Street bailout bill. "To some degree, we're past the worst of it. It feels like we're past the worst of it.''

But Zandi agrees with the New England forecast: "I think it's going to take a good solid almost two years before we feel comfortable about what's going on ... The economy's not going to find its footing until the housing market bottoms.''

And if you ask: When -- exactly -- does this end? Zandi will even -- half seriously -- tell you: "If I were going to pick a day, I would say, August 15th, 2010. Not that the economy's gonna be roaring back on that day, but i think it'll be on that day that we'll all feel like the worst is past us.''