State far outpacing US economy, report says

The Massachusetts economy, buoyed by the technology sector, grew about five times faster than the nation's in the first three months of the year, the University of Massachusetts reported.

The state's economy expanded at 3.2 percent annual rate in the first quarter, UMass said, while the US economy grew only slightly -- at a 0.6 percent annual rate, according to the Commerce Department.

Massachusetts, after lagging behind the US through the economic recovery of the past few years, is weathering the recent national downturn because of the strength of its technology, science and healthcare sectors, according to UMass. State exports of technology and pharmaceutical products are strong and so is hiring in those sectors. Employment in professional, scientific and technical services, for example, grew nearly 4 percent over the past year, compared to less than 1 percent for the state as a whole, according to the state Department of Workforce Development.

Meanwhile, the state has been spared the worst of the housing collapse and mortgage industry meltdown because it did not experience the same level of speculative building as other parts of the country, such as California, Florida and Nevada. As a result, the state added 4,600 jobs in the first three months of the year even as the nation shed more than 200,000 payroll jobs.

"The technology part of our economy is offsetting the housing market,'' said Michael Goodman, director of economic and public policy research at the UMass Donahue Institute.

Nonetheless, consumers are struggling, UMass analysts said. Falling home values combined with rising food and fuel costs are hurting confidence and spending. Consumer sectors, such as retail, are losing jobs. Retail employment has declined about 1 percent over the last year, according to state figures.

And continued weakness in housing and consumer spending will slow the state's economic growth to an annual rate of about 2.5 percent over the next six months, according to UMass. At that rate of expansion, employment growth is likely to stall or decline, said Alan Clayton-Matthews, the UMass-Boston professor who calculates the state economic growth rates.
(By Robert T. Gavin, Globe staff)