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Outlook darkens on Mass. job picture in ’10

Unemployment to peak near 10%, according to forecast

Job fairs will remain popular attractions with the state forecast to lose more than 60,000 additional jobs before the labor market hits bottom. Job fairs will remain popular attractions with the state forecast to lose more than 60,000 additional jobs before the labor market hits bottom. (.Josh Reynolds for The Boston Globe/File 2009)
By Robert Gavin
Globe Staff / November 11, 2009

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The Massachusetts economy will shed tens of thousands of jobs over the next year, with the unemployment rate peaking near 10 percent in the middle of 2010, according to a forecast released yesterday.

The outlook is darker than just a few months ago, when it appeared that job losses were coming to an end and the state would emerge from the recession earlier than the nation as a whole.

“Now that appears to have been an illusion,’’ said Northeastern University economics professor Alan Clayton-Matthews, who prepared the forecast for the New England Economic Partnership, a nonprofit research group.

The forecast, released at the partnership’s semiannual conference in Boston yesterday, projected that the state would lose more than 60,000 additional jobs before the labor market hits bottom in the third quarter of 2010. That would bring total job losses in this recession to just under 200,000, or 5.9 percent of total employment, slightly worse than for the US economy, which is projected to lose about 5.5 percent of its jobs.

The Massachusetts unemployment rate, now at 9.3 percent, will rise to 9.6 percent before beginning to retreat in the second half of next year, according to the forecast. That would bring the state’s jobless rate to its highest level since 1976, still below the US rate. National unemployment, now at 10.2 percent, is projected to peak at about the same time at 10.7 percent, according Moody’s Economy.com, a West Chester, Pa., forecasting firm.

Governor Deval Patrick, speaking at the State House, said his administration is working to boost the state’s economy, focusing on promising sectors such as alternative energy, education, and life sciences, which includes biotechnology and other health-related sectors.

But, he acknowledged, “If you’re out of a job or at risk of losing your job, you could care less about what the statistics say. We’re still in for a few bumps before opportunity is readily available and widely available to everyone.’’

That’s likely to take years, according to the forecast. The state’s unemployment rate is projected to remain above 9 percent into 2011, with no significant job growth until 2012. Massachusetts is not expected to regain all the jobs lost in the recession until 2013.

It now appears the state’s recovery will trail the nation’s by three or four months, said Clayton-Matthews. The national economy, as measured by the production of goods and services, began expanding in the third quarter, which ended Sept. 30. The state’s economy, which continued to shrink last quarter, is expected to resume growing in the current quarter.

Employment typically lags behind production, because even when business picks up, companies hire cautiously until they become confident the recovery will last.

This summer, it looked as if the state’s economy had begun to rebound ahead of the nation’s. Job losses had diminished for several months, slipping to just 700 statewide in August. But the state shed more than 9,000 jobs in September as incomes and consumer spending fell sharply, suggesting a much weaker economy.

Still, it appears the state’s economy is on the mend, Clayton-Matthews said. Worldwide technology sales are rebounding, and so are exports. That’s good news for Massachusetts, which has a high concentration of tech firms that sell internationally. “By every measure,’’ Clayton-Matthews said, “information technology markets have turned the corner, and sharply.’’

A housing recovery is also underway, as both sales and prices have risen solidly over the past several months. Homes in Massachusetts are now at their most affordable since the mid-1990s, Clayton-Matthews said.

And while businesses remain reluctant to hire, the pace of layoffs is slowing. First-time claims for unemployment benefits have plunged more than 40 percent since peaking earlier this year, to 7,900 a week at the end of October from 13,500 in mid-March. First-time claims have slipped below 40,000 a month, which economists consider the dividing line between a recessionary state economy and one that is recovering, Clayton-Matthews said.

Some companies, however, are continuing to slice workforces. American Student Assistance, a Boston nonprofit that helps to manage student loans, has laid off 109 workers, or 17 percent of its workforce. In January, the company cut 50 jobs.

Aramark Corp. of Philadelphia said it will cut 118 jobs by the end of the year at its site in Norwell, which sells uniforms and work clothing to businesses. “We’re strategically expanding our operations to other locations,’’ said Aramark spokeswoman Kristine Grow.

Adidas AG’s Reebok athletic footwear business is laying off 145 workers, as the company shuts down its Stoughton distribution center and consolidates distribution in South Carolina. The closing was announced in April 2007, before the start of the current recession.

Matt Viser and Hiawath Bray of the Globe staff contributed to this report. Robert Gavin can be reached at rgavin@globe.com.