New England lagged behind the national recovery in the mid 1970s but did better than average coming out of the 1982 recession. The region’s strong recovery after 1982 was the result of increased defense contracts, a high-tech export orientation, and the waning of the 1970s energy price shock. What do those experiences suggest about the pace and character of the present recovery?
Regression results indicate that the most important determinants of a state’s recovery are how well its key industries perform nationally, relative wage and energy cost changes, and the fiscal picture. New England’s industry mix, its pre-recession increases in real wages, state government spending cutbacks, and federal defense cuts all point to a 1991-94 recovery that will be slower than the national average.