The worst of the recession may be over, but a new economic forecast points to a "slow and weak recovery" in the New England states, with job losses likely to continue until the fourth quarter of 2010.

The report, released Tuesday by the New England Economic Partnership, said the region had lost about 346,000 jobs since the beginning of 2008, with the number expected to top 400,000 before the end of the decline.

The six-state unemployment average should peak at 9.4 percent next year, keeping it below the peak national average, the forecast said.

"Even though the national economy has improved since the spring, many of the fundamentals remain weak," said Ross Gittell, an economist at the University of New Hampshire and vice president of the New England Economic Partnership, in a statement accompanying the forecast.

"Commercial real estate has yet to bottom out and problems in commercial real estate will negatively affect the banking sector and financing in the region," he said.

Declines in household wealth and lack of consumer confidence will also hinder the recovery in New England, Gittell said.

The report cited Maine and New Hampshire as the only states in the region where the percentage of total job losses sustained since the start of the recession will likely fall below the national average. Both states, however, should experience lingering effects from the economy until at least the end of next year.

The Rhode Island economy remains in "serious trouble," according to the forecast.

The state's 13 percent unemployment rate in September was more than 3 percentage points higher than the national average, and a persistent state government budget deficit could prevent the overall state economy from growing for several years, the report warned.

"The creation of jobs and solving the budget deficit problem once and for all are the major economic issues Rhode Island faces as it enters 2010," said Edward Mazze, professor of business administration at the University of Rhode Island.

Connecticut was late to enter the recession but will also be slow in exiting it, forecasters said. The state continues in a "severe and prolonged" downturn, with job growth likely to recover at a slower rate than other states and unemployment predicted to remain "uncomfortably high" at 5.8 percent even by the end of 2013. Continued...