- Associated Press - Tuesday, January 17, 2017

BOSTON (AP) - New England’s economy should continue to grow over the next two years but not as fast as the nation as a whole, and significant state-by-state disparities remain in the region, economic forecasters said Tuesday.

The New England Economic Partnership released its annual outlook during a conference at the Federal Reserve Bank in Boston.

In its report, the business-backed research organization pointed to Massachusetts and New Hampshire as having the strongest state economies in the region, buoyed by unemployment rates that are among the nation’s lowest. A downside of that success, however, could be future constraints on the labor force - as more baby boomers retire - limiting the potential for future growth, the economists said.

Maine and Vermont are troubled by “demographic factors and rural area economic stagnation,” while Connecticut and Rhode Island are lagging behind the rest of the region in overall economic vitality, the economists said.

Rhode Island is slowly bouncing back from the severe depths of recession, but the state’s unemployment rate is still the highest in the region and 12th highest nationally.

The short-term outlook for the six-state region as a whole predicted the strongest economic growth to occur in 2017 and 2018, followed by a period of declining growth, according to Ross Gittell, a University of New Hampshire economist and vice president of the partnership.

Growth in the region’s gross domestic product, after peaking at 2.8 percent in 2015, declined to 1.6 percent last year but is expected to exceed 2 percent in 2017 and 2018 - still below the U.S. average.

Employment growth will also lag behind the nation over the next few years, the forecast said, even as New England’s combined unemployment rate dips from 5 percent in 2015 to 3.7 percent in 2018 largely because of a declining labor force.

With the oldest population in the U.S. as measured by median age, Maine’s labor supply is “essentially tapped out,” with the supply of young workers offset by the departure of retiring workers, economists wrote.

The New Hampshire economy is in “great shape” overall, but the progress has been largely felt in cities and towns closer to Boston and “many parts of rural New Hampshire have recovered very little, if at all, from the Great Recession,” according to the forecasters.

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