Sat, October 31, 2009
Massachusetts Economy Has Hit Bottom – Maybe
Economists at the University of Massachusetts believe the state’s economy may have bottomed, but the indicators remain ambiguous.
The MassBenchmarks Current Economic Index indicates that the Massachusetts economy declined at a 1.1 percent annualized rate in the third quarter of 2009, even as the nation’s economy is estimated to have expanded at an annual rate of 3.5 percent in the same period. Comparisons with national figures are confounded by one-time economic stimuli like Cash for Clunkers and the first-time homebuyer tax credit, both of which probably disproportionately helped states with greater dependence on the auto industry and more severe housing price slumps. By one estimate, almost half of GDP growth in Q3 came from the Cash for Clunkers program.
The state’s sources of growth include residential real estate and a turnaround in worldwide demand for information technology. With weaknesses remaining in the job markets and consumer spending, economists are hesitant to make an unambiguous prediction that the Bay State’s economy will rebound in the next few months. The Boston Globe recently predicted a “jobless recovery” for Massachusetts.
The latest MassBenchmarks update on the state’s economy is available on its web site.
