Mass. feels sting of inflation, job cuts
If you've always felt it costs more to live here, you're right.
Consumer prices in Greater Boston jumped 6.3 percent over the past year, the biggest surge in inflation since 1990 and the biggest increase in any metropolitan area, the Labor Department reported yesterday.
But soaring gasoline prices, high housing costs, and rising food prices were not the only bad news for the local economy.
The state reported yesterday that Massachusetts employers shed nearly 3,000 jobs in July, the first monthly job losses since April and another sign that the national economic downturn is taking a toll here. Rising inflation and declining employment are making the state's economy look more and more like the nation's.
The US economy is struggling with stagflation, the combination of high inflation and stagnant growth. Nationally, employers shed 51,000 jobs in July, the seventh consecutive month of job losses. And consumer prices have risen 5.6 percent over the past year, the fastest inflation rate since early 1991, according to the Labor Department.
"This isn't good news for the economy, and it's not good news for consumers," said Denis McSweeney, regional commissioner of the Bureau of Labor Statistics in Boston. "There's no state in New England that's going to escape the impact of the national economic slowdown."
The rising costs of food, shelter, and energy are cutting into the discretionary consumer spending that drives the economy. Nationally, consumer spending accounts for about two-thirds of all economic activity.
In Boston, goods tend to cost more because the region is far from refineries, natural gas fields, and major centers of food production. Gasoline prices in Boston rose nearly 40 percent over the year, compared to about 38 percent nationally. Housing costs, which include utilities, rose 6.1 percent, compared to about 3.9 percent nationally.
Food prices, however, rose 5.1 percent, slightly less than the national increase of 5.8 percent.
Jean Niane, 62, a Back Bay resident and retired social services worker, said rising prices have forced her to become an aggressive bargain hunter.
"You find yourself eating things you normally wouldn't," said Niane, after shopping at a Shaw's supermarket in Dorchester. "I don't like day-old bread, but it's looking good and tasting pretty good now."
As consumers pull back, sectors that depend on their spending are cutting jobs.
Leisure and hospitality, which includes hotels and restaurants, cut 2,500 jobs in Massachusetts in July, while retailers cut 100. Retailers have shed 5,500 jobs over the past year.
Other key sectors losing jobs in July were manufacturing, which shed 2,400; professional and business services, 700; and construction, 500.
Education and health services, which includes universities and hospitals, added 3,600 jobs, and financial services added 100. Employment in information, a technology sector that includes software, was flat.
Despite a slight decline in the unemployment rate, to 5.1 percent from 5.2 percent in June, Massachusetts' jobless rate has risen sharply in recent months, up a percentage point since April.
Robert Gavin can be reached at rgavin@globe.com. Globe correspondent Erich Schwartzel contributed to this report. 