More job losses predicted for Massachusetts

By Robert Gavin, Globe Staff

The Massachusetts economy will shed tens of thousands of jobs over the next year with the unemployment rate peaking near 10 percent around summer, according to a forecast released today.

The forecast, by the New England Economic Partnership, a nonprofit research group, projects the state will 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 better than the 2001-2003 recession when Massachusetts shed 205,000 jobs, or 6.1 percent of employment.

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The jobless 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 be the highest jobless rate since August 1976.

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,'' Northeastern University economics professor Alan Clayton-Matthews said in the forecast.

After losing just 700 jobs in August, the state shed more than 9,000 in September as incomes and consumer spending fell sharply, suggesting a weaker state economy. Clayton-Matthews forecast that job growth in Massachusetts could lag the nation by several months.

The production of goods and services, however, has likely hit bottom and will soon begin to expand , albeit slowly, according to the forecast. Employment typically lags production because businesses hire cautiously until they become confident that the recovery will last.

Meanwhile, a housing recovery is already underway in the state, according to the forecast. Both sales and prices have risen solidly over the past several months after more than three years of steep declines. Homes in Massachusetts are now at their most affordable since the mid-1990s, according to Clayton-Matthews.