The Northeast economic recovery is underway, but potholes could undermine road to prosperity. By George Lauriat, AJOT One thing that characterizes Northeast cities from those in other parts of North America is the propensity for developing vehicle trashing potholes. For example, in an average year, the city of Boston fills some 19,000 potholes ranging from baseball glove size to yawing chasms that could swallow a car like an urban Moby Dick. The City even has a machine nicknamed Potzilla, whose only purpose in life is to fill in the City’s potholes. Generally, the pothole filling in New England stops in March, coinciding with the end of the first quarter of the year, a good time to assess economic activity just before baseball’s opening day. As with other recessions, the Great Recession severely hurt the region, as construction dried up and housing starts vanished, hi-tech jobs migrated to other regions of the US or abroad, and the financial service sector slashed high paying jobs with the fall in the share markets. In 2012, while it might be safe to say the region is on the road to economic recovery, it is a road fraught with potholes that could wreak havoc and prolong the process. Locally, New England’s State governments, especially Connecticut, are facing budget problems that could plunge them into another hole that will require even more effort to be extracted from. A decade long migration of high-level industry from the region also could impact jobs and the future tax base. With the decline in regional home values and increased personal debt, the vaunted consumer purchasing power of the area has been compromised. The question is when will full recovery from the recession take hold in this region? New England Economy The Northeast is roughly an area running like a large triangle with Halifax, Nova Scotia in the Northeast, down through Boston, Massachusetts to New York City and back up north to Montreal, Quebec. Although it is relatively small compared to other regions in North America, it is nevertheless larger than the United Kingdom. New England, consisting of Massachusetts, Connecticut, Rhode Island, New Hampshire, Maine and Vermont, makes up a large portion of the Northeast. The economy, like the terrain, is unique to the region with its own ebb and flow within the vastness of the US. The historical ties and proximity to Northern Europe has had great influence on the region’s economic development, and even with the rise of Asia and China in particular, the Northeast remains highly sensitive to European affairs. For example, Northeasterners are more attuned to issues like the European debt crisis than say the Mid-Westerners or Californians. The ties to the “old country” are still relevant both politically and economically in ways that are not shared with much of the US. The corporate makeup of the region is also a little different, combining some of the oldest corporations in the US with a mix of relatively new companies, whose products are often cutting edge. Another element of the corporate landscape is that many “brands” with Northeast roots have been bought up buy European and now Asian corporations. While this has happened many times before, the recession accelerated the process. What the long impact will be is hard to forecast, but geographical loyalty may be strained. The New England region has a relatively affluent population of approximately 14.5 million (with 6.5 million in Massachusetts alone). The 2010 US Census indicated that New England’s population grew just 3.8% from 2000 to 2010 compared to 9.7% nation wide. It is also an older population with nearly 14% over 65 years of age, which is only slightly behind the nation’s oldest population, Florida with 17.3% over 65. New England’s GDP (Gross Domestic Product is the dollar value of all goods and services produced in a state – imports are deducted from the totals) is around $721 billion. The size of the GDP is significant. To put this in perspective, the GDP of Greece is around $300 billion and Portugal, $2