Abstract
The downturn in the New England economy has surprised everyone with its severity and breadth. Even those who foresaw that the rapid expansion in the mid-1890s could not be sustained warned of slower growth rather than a sharp contraction. The role played by services and financial services in New England's fluctuating economic fortunes is assessed. An examination of the composition and timing of changes in finance, insurance, and real estate (FIRE) and services employment tends to support the critical role played by construction and real estate. Although nationally oriented FIRE and services industries grew strongly in the mid-1980s, more locally oriented segments of the industries accounted for disproportionate shares of new jobs. Even if nationally oriented FIRE and services industries were not the primary shapers of the region's economic fortunes, they account for a larger fraction of employment in New England than in the US, and they grew vigorously in the 1980s while manufacturing was declining.