New England's economic recovery seen lagging U.S.

* New England to lose 450,000 jobs, economists say

* Employment declines to bottom in Q2 2010

BOSTON, May 21 (Reuters) - New England is in a "severe recession" that will destroy about 450,000 jobs, or about 6.3 percent of its workforce, by next year when a slow recovery begins that will lag the U.S. average, economists said.

"We expect the region to have a relatively slower recovery based upon our dependence on investment spending, capital goods spending, particularly in Massachusetts," said Ross Gittell, forecast manager of the New England Economic Partnership, a group of top regional economists.

"We are in a severe recession," the University of New Hampshire professor told a conference at the Federal Reserve Bank of Boston, where he released a new forecast on Thursday.

The high concentration of business investment and high-income dependent industries in New England's six states, along with a slow-growing and aging population, will lead to a slightly more pronounced employment decline, he said.

The drop in New England's employment will likely bottom in the second quarter of next year, he said. From then until the end of 2012, employment will grow at a rate of just 5.8 percent, compared to 9.1 percent nationally, he added.

"Our rate of growth in the region is expected to be about two-thirds the rate of growth in the U.S. coming out of this recession," said Gittell, adding that New England was about two-thirds of the way through its projected employment losses.

By the end of 2012, about 60,000 jobs will have disappeared in New England since the start of 2008, the forecasters said in their 112-page spring report. Losses are concentrated mostly in the construction, manufacturing and finance industries.