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Many struggling amid recovery

‘Imbalances’ persist as state outpaces US

By Megan Woolhouse
Globe Staff / May 27, 2011

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The Massachusetts economy continues to recover ahead of the nation’s due to the strength of the state’s education, health care, and technology sectors, yet many people continue to struggle, the University of Massachusetts reported yesterday.

A key element of the state’s recovery has been a rise in exports to Germany, China, India, and other countries, largely due to a relatively weak dollar, the report said. A weaker dollar makes US products cheaper in many foreign markets.

“Overall, it’s good news; we’re moving in a positive direction,’’ said a University of Massachusetts Dartmouth public policy professor, Michael Goodman. He is co-editor of MassBenchmarks, the UMass journal that released the analysis. “But there are still troubling imbalances.’’

The quarterly report is based on an assessment by the journal’s editorial board, which comprises economists from several Massachusetts universities and the Federal Reserve Bank of Boston. The recovery, the economists said, has been slow and uneven, and the state continues to struggle with moribund housing markets and persistent long-term unemployment.

While parts of Greater Boston have fared well, many areas continue to struggle with double-digit unemployment. Fall River, Lawrence, Lowell, New Bedford, and Springfield all have jobless rates near or above 10 percent, the report said, well above the state’s overall rate, which fell below 8 percent last month.

The national unemployment rate was 9 percent.

The report recommended that those places aim to improve public education and rebuild infrastructure to create jobs and economic opportunities.

“It is understandable that in many areas of the Commonwealth, the news of economic recovery is greeted with profound skepticism and the fact that Massachusetts is performing better than the nation as a whole is of little consolation to residents of these communities,’’ the report said.

That skepticism was reflected in a consumer confidence survey. It found that more Massachusetts residents expect business conditions to worsen over the next six months. Consumer confidence in Massachusetts fell for the first time since July as households worried about the strength of the recovery, Mass Insight, a Boston research firm, reported yesterday.

The firm’s quarterly consumer confidence index dropped 7 points from January to 67 in April. It’s down 13 points from a year ago. Consumer confidence in Massachusetts remains only slightly higher than the national average, the firm said.

“Uncertain times continue to undermine consumer confidence in Massachusetts,’’ Mass Insight president William H. Guenther said in a statement.

“It’s hard to be an unqualified optimist with continued high unemployment, concerns over housing, and the European mess.’’ Several European nations are struggling with weak economies and heavy national debts, unsettling global markets.

Still, the state’s economy appears to be improving.

Massachusetts employers have added jobs in six of the past seven months, including nearly 20,000 in April, according to state labor statistics.

Massachusetts exports in the first quarter were up more than 11 percent from a year earlier, with overseas sales of technology products particularly strong, according to the World Institute for Strategic Economic Research, a nonprofit group in Leverett.

The economists in the UMass report said they were encouraged by April job growth, particularly in manufacturing and construction — two areas hard hit by the recession.

Among other positive signs: The state’s economy grew at a more than 4 percent annual rate in the first quarter, more than double the pace of the nation.

Yesterday, the Commerce Department reported that the US economy grew at a 1.8 percent annual rate, slowed by high energy costs, government spending cuts, and a large trade deficit, meaning imports exceeded exports.

Also yesterday, the Labor Department said that first-time claims for unemployment benefits unexpectedly rose by 10,000 last week to 424,000.

Megan Woolhouse can be reached at mwoolhouse@globe.com.