Mass. economy is growing twice as fast as nation’s
The Massachusetts economy expanded at more than double the rate of the national economy during the second quarter of the year, boosted by federal stimulus programs, demand for technology products and the strongest job growth since the so-called miracle years of the 1980s, the University of Massachusetts reported today.
The performance in the three-month period that ended June 30 was the fourth consecutive quarter that the state has outpaced national economic growth, UMass said in its quarterly journal, MassBenchmarks. Analysts, however, warned that the state's economy is likely to slow as effects of stimulus programs fade, and a decelerating national economy tamps economic growth here.
"Government spending has played a much greater role in stimulating growth and encouraging consumer spending,'' said Robert Nakosteen, an economics professor at UMass Isenberg School of Management. "Going forward, however, government stimulus is waning and it is far from certain that private sector spending will take up the slack."
The state's economy grew at a 6.4 percent annual rate in the last quarter, after expanding at 4 percent rate in the first quarter, and 6 percent at the end of last year, according to UMass. Nationally, economic growth downshifted to a sluggish 2.4 percent annual rate in the second quarter, after expanding 3.7 percent in the first quarter and 5 percent in fourth quarter of last year, the US Commerce Department reported today.
Massachusetts has emerged from the recent downturn more quickly than many other parts of the country in large part because its economy is driven more by technology and business investment and less by housing and consumer spending than the nation as whole. A collapse in housing, which sparked a global financial crisis, and pull-back in consumer spending led the nation into what has been called the worst recession since the Great Depression.
Strong global demand for technology products has helped fuel the state's recovery, said Alan Clayton-Matthews, a Northeastern University economics professor who analyzes a variety of data to estimate the state's economic growth for the UMass journal. For example, worldwide semiconductor sales have surged nearly 50 percent over the past year, while shipments of North American semiconductor equipment has tripled, according to industry statistics. Both are key Massachusetts products.
The technology sector's rebound, however, is only part of the story of the state's recovery, Clayton Matthews said. Employment increased at a 4.5 percent annual rate in the second quarter, double the pace of US employment gains, and the fastest rate of job growth in Massachusetts since the third quarter of 1984.
Temporary hiring for the US Census contributed to the strong employment growth here, but the private sector still expanded solidly, according to the UMass analysis. Private sector jobs in Massachusetts increased at a 4 percent annual rate in the second quarter, the fastest growth in at least 20 years.
Even sectors hard hit in the last recession rebounded, said Clayton-Matthews. Construction employment, for example, surged at 21 percent annual rate, and manufacturing jobs grew at a 4 percent rate.
Income and spending each rose at double-digit rates during the last quarter, according to the UMass analysis of income and sales tax collections.
"It was a strong quarter," Clayton-Matthews said, "and it was across the board."
Still, there are signs of slowing. Nationally, consumer spending remains sluggish, and industrial production fell in June. In Massachusetts, exports have declined in recent months, perhaps the result of recent financial and economic turmoil in Europe, a key foreign market for Massachusetts companies.
High unemployment -- 9 percent in Massachusetts and 9.5 percent nationally -- and the slowing US economy pose additional threats to the state's recovery.
"We can't continue steam-rolling without the national economy growing," Clayton-Matthews said.