New England’s Wide-Ranging Economic Ills Far From Over : Unemployment lines are long and ‘Help Wanted’ signs scarce. Despite a pickup in home sales, optimism for a recovery remains in short supply.

BOSTON —  Last September, Robert DiGianflice received a jolt when his job as a security guard for a school and office complex was eliminated for cost reasons.

But even worse than the initial surprise has been DiGianflice’s inability, over the ensuing eight months, to find another job.

“There is nothing out there that pays any kind of money,” said DiGianflice as he waited to collect his unemployment check at a state jobs office. In fact, he said, the only jobs are temporary, low-paying ones. “It’s depressing.”

DiGianflice’s frustrations are common in New England, where unemployment lines remain long and “Help Wanted” signs scarce, despite speculation that a national economic recovery may be on its way.

BACKGROUND: For New England, which has been hit the hardest of any region of the country by the recession, losing nearly 400,000 jobs since early 1989--the worst drop-off recorded since World War II--optimism remains in short supply these days.

There have been at least a few positive economic signs. Home sales are up across the region. In Massachusetts, sales from January through March increased 37% over the same period last year, and consumer confidence has rebounded since the Persian Gulf War, according to recent surveys.

Some of Massachusetts’ high technology companies, after several years of losses, are “reporting some pretty good quarters,” said Christopher Anderson, of the Massachusetts High Technology Council.

But even optimists concede that the region’s economic troubles are far from over. The unemployment rate for the six New England states in January was 7.4%, and DRI/McGraw-Hill, a Lexington, Mass., forecasting firm, has projected that it will rise to 8% this summer.

The Massachusetts unemployment rate in March reached 9.7%.

Despite the pickup in home sales, the construction industry remains depressed. And layoffs and plant closings continue across New England. About 70,000 jobs were lost in the region between November and February.

Evidence of the continuing recession also comes from New England’s state capitols, where officials are struggling to close gaping budget deficits caused by steep declines in tax revenues.

Massachusetts State Treasurer Joseph Malone warned recently that the state deficit for the fiscal year beginning July 1 could total $3 billion, despite efforts to contain it. The state also faces a current-year deficit of close to $400 million.

In Maine, revenue figures show the state with a $16-million deficit this year despite cost-cutting moves.

States have responded to the budget gaps with a combination of deep service cuts and tax increases. Three states--Massachusetts, Maine and Rhode Island--also have furloughed state employees, forcing them to take days off without pay or with pay deferred.

Economists have said that they expect the regional recession to last until the end of this year, with a gradual recovery predicted after that time.

Sara Johnson, regional economist for DRI/McGraw-Hill, said the Gulf crisis, by temporarily raising oil prices and undermining consumer confidence, has set back the region’s recovery by about six months.

Even when the recovery comes, few economists expect New England to regain the momentum that it had during the boom years of the early to mid-1980s, when a combination of high defense spending and rapid growth in the high-tech industry made the region one of the nation’s hottest.

“We’re going to improve, but we’re not going to be back to business as it was in the 1980s . . . that was an abnormal situation,” said Dick Green, New Hampshire’s director of economic development.

The region’s “miracle” days carried some of the seeds of its bust, economists observed. In particular, the high-tech boom spawned a rash of real estate development. When the boom began to fade because of increased competition in the computer industry, the region was left with a glut of homes and office space.

“Once the economy softened, the real estate markets crashed,” Johnson said. She said bad real estate loans in turn sapped the profitability of banks, which responded by restricting credit to all businesses.

When the national recession came along, it simply dealt a blow to a region already down, economists said.

OUTLOOK: Despite the region’s troubles, economists say they do not expect New England’s fall to parallel that of Texas’ oil-based economy.

Matt G. Kane, staff economist for the Northeast-Midwest Institute, said that unlike Texas, New England’s economy, with its diverse mix of industries, from computer software to tourism, can adjust to changing economic conditions.

Massachusetts Economic Affairs Secretary Daniel S. Gregory said another New England asset was the “brain power,” derived from its universities. “That’s the source of new technologies.”

But for Donna Geaney of Boston, who has been out of work since September, such long-term optimism for the economy offers little consolation. “It’s scary,” she said of her fruitless search for a job. “What am I going to do?”

THE SLUMP IN NEW ENGLAND

Despite a few bright spots in the regional economy, the unemployment rate is remaining stubbornly high. For those who are working, annual wages increases have declined and are expected to flatten out.

Source: DRI / McGraw-Hill