The economy in New England will marginally outperform U.S. growth, while the South Atlantic region is expected to lag in the coming year, according to a regional economic forecast report released today by TD Economics, an affiliate of TD Bank.
Fewer foreclosures, a shallower downturn in home values, a more stable job market, and the region’s resilient high-tech and professional services sectors are all critical elements that will help propel faster economic growth in New England relative to the rest of the country this year. The factors that traditionally restrain the economic performance of the region, including an older population and migration outflows, helped to partially shield New England from the housing excesses that exploded in other markets, particularly the sand states of Florida, Nevada, California and Arizona.
This momentum in New England will be short-lived, the report said. In 2012, the unfavorable population and migration trends, coupled with lower home affordability and generally higher costs of doing business, return as dominant influences in tempering the pace of growth.
"New England’s and Mid-Atlantic’s older demographics, mature economies, resilient housing markets, highly skilled working populations and outsized health care sectors provided a stronger footing for the economic recovery following the Great Recession. We anticipate that these strengths will carry over in 2011 and, as a result, both regions will be able to outperform national economic growth," the TD economists write. "While the South Atlantic’s economy will accelerate alongside the Northeastern economy in 2011, it will continue to lag. The heavily battered housing market will bite deeper into its economic growth, while wealth and employment are coming from a deeper deficit position. However, in 2012, the natural economic tendencies of all three regions will prevail, with the South Atlantic expected to lead the pack."
The report’s authors, Deputy Chief Economist Beata Caranci, Economist Alistair Bentley and Economist Christos Shiamptanis, predict the South Atlantic region will be poised for a stronger economic recovery, in part reflecting the release of more pent-up demand, but also greater housing affordability and a return to more favorable demographic trends.
