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Are the gains made on Wall Street being felt on Main Street?

3:40 PM, Jun 26, 2013   |    comments
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SCARBOROUGH, Maine (NEWS CENTER) -- The stock market is having a great year, with many corporations raking in record profits through the first half of 2013, but are those big gains on Wall Street being felt here on Main Street? 

"The stock market has clearly moved in a trend that is different than, actually, the economy as a whole," explained Dr. Charles Colgan, Professor of Public Policy at the Muskie School at the University of Southern Maine. 

He says the reason the markets are up are two-fold, interest rates are low so investors are putting their money into stocks and American corporations are at their most profitable ever.

Colgan says most of those corporate profits aren't going into people's pockets, but is just cash sitting in businesses that is not being reinvested.

"Maine, with a relatively small economy, has simply lagged as we have traditionally done behind the national economy so that we have barely begun to recover at all even as the national economy has made it about halfway back," he stated.

According to the Maine Department of Labor the state lost roughly 29,000 jobs during the recession, but has only recovered about 6,000 of those jobs so far.

"Maine hasn't gotten to the recovery point, and every time we do, something comes along to slow the economy down and stretch out the time it takes us to get back to where we were," said Dr. Colgan.

He has revised his most recent estimate as to when the state will fully recover, from 2015 to the fall of 2016.

"We are not seeing those gains," Ryan Elsemore said bluntly.  "It is kind of funny, because we decided to go into a small business instead of putting any money in the stock market because a few years ago it was so volatile."

That business, Home Accents on Route One in Scarborough, is now selling off all of its stock and is going out of business.

"You get to a point as a small family run business that you don't have anymore resources to put into it, and you have exhausted all your options, and you have no choice but to close down," he explained.

While the state's unemployment rate has dropped over the past few months, Colgan says the state has not seen that happen in three consecutive quarters since 2007. 

He says urban centers in the state, which are where many of the high-growth industries are located, will continue to add jobs, but overall growth in Maine will continue to lag behind the country and the region.

NEWS CENTER

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