The Massachusetts economy, which had been growing faster than the national average on the back of the state’s thriving research sectors, is slowing because of a combination of national and global problems, according to a bulletin from a panel of local economists released Thursday.
The MassBenchmarks report found that the state’s economic growth has slowed significantly because of the European debt crisis, slower growth in China, reduced US business investment in technology, the continued weak US economy and growing uncertainty in Washington over the future of taxes and budget spending with the upcoming November elections and deep partisan divides in Congress. Worse, the report found that several economic indicators suggest the economy will continue to slow going forward.
“Deteriorating global economic conditions finally appear to be taking their toll on the state’s innovation sector,” the report found.
The Benchmarks bulletin also noted that the state technology’s sector, which has long been a strength, could be hurt by softening demand for silicon computer chips and other tech products around the globe. Exports, which include the state’s information technology products, have already declined from last year.
Also Thursday the US Commerce Department issued a revised estimate of economic growth for the second quarter of 2012, finding the national economy grew at a low 1.3 percent for the period, down from the prior 1.7 percent. In Massachusetts the local economy lost 8,200 private sector jobs in August and unemployment rose for the second straight quarter to 6.3 percent, the state labor office reported. That was the economy’s worst showing in more than three years, although the jobless rate is still well below the national average of 8.1 percent.
The MassBenchmarks report is published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. Its editorial board includes a number of economic analysts from across the state.