The downturn in the New England economy has surprised almost everyone by its severity and breadth. Even those who foresaw that the rapid expansion of the mid 1980s could not be sustained warned of slower growth rather than sharp contraction. This article assesses the role played by services and financial services in New England's fluctuating economic fortunes.

The author examines the size of the nationally oriented component of financial and other services and the stability of a more servicesoriented economy. If financial and other services can serve as regional economic drivers in a significant way, these industries are a potential source of regional economic recovery and economic development initiatives should take these industries into account.