Friday, July 30, 2010
Massachusetts Grew Robustly in Second Quarter, UMass Journal Reports
Commonwealth experiences fastest quarterly job growth in 25 years.
The Massachusetts economy expanded at a 6.4 percent annualized rate in the second quarter of 2010, according to the MassBenchmarks Current Economic Index. The U.S. Bureau of Economic Analysis reported today that the national economy expanded at an estimated annual rate of 2.4 percent during the same period.
The MassBenchmarks Current Economic Index for June was 168.8, up 7.3 percent from May (at annual rates), and up 3.6 percent from June of last year. The current index is normalized to 100 in July 1987 and is calibrated to grow at the same rate as Massachusetts real gross domestic product over the 1978–2003 period.
The MassBenchmarks Leading Economic Index for June was 6.1 percent, and the three-month average for April through June was 6.2 percent. The leading index is a forecast of the growth in the current index over the next six months, expressed at an annual rate. Thus, it indicates that the economy is expected to grow at an annualized rate of 6.1 percent over the next six months (through December).
"Massachusetts payroll employment grew at a 4.5 percent annual rate in the second quarter of this year — versus 2.2 percent for the U.S., the fastest quarterly growth since the third quarter of 1984, the height of the 'Massachusetts Miracle' expansion," noted Dr. Alan Clayton-Matthews, MassBenchmarks Senior Contributing Editor and Associate Professor of Economics and Public Policy at Northeastern University. "Job growth was accompanied by moderate labor force growth of 0.7 percent in the second quarter, and a reduction in the unemployment rate from 9.3 percent in March to 9.0 percent in June," Clayton-Matthews added.
While job growth was boosted by hiring for the 2010 Census, employment growth was not all due to this temporary expansion in federal jobs. Private sector employment in Massachusetts grew 4.0 percent during the second quarter, the fastest growth since NAICS-based data became available in 1990.
"The Commonwealth's growth outlook may not be as strong as the MassBenchmarks leading index suggests. Up until now, government spending has played a much greater role in stimulating growth and encouraging consumer spending than in past cycles," cautions Professor Robert Nakosteen, Executive Editor of MassBenchmarks. "Going forward, however, the government stimulus is waning, and it is far from certain that private sector spending will take up the slack."
Concealed within the recent economic data is evidence that the rate of economic growth in both the U.S. and in Massachusetts slowed toward the end of the second quarter. Nationally, industrial production fell in June, as did manufacturing shipments. State merchandize exports, although well above their depressed level of early last year, declined moderately in the last three-month period ending in May. And the state's unemployment rate remains at 9.0 percent representing a major threat to the sustainability of this expansion.
It is difficult to precisely gauge what impact these developments may have on the outlook for Massachusetts. However, even if they were to slow the state's growth by two percentage points, the state's economy is still expected to grow at a healthy four percent rate for the final two quarters of 2010.
MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The Donahue Institute is the public service, outreach, and economic development unit of the University of Massachusetts Office of the President. The current and leading economic indexes are complied and analyzed by Dr. Clayton-Matthews and released quarterly by MassBenchmarks.
For a full breakdown of the latest indexes, click here. A comprehensive analysis of the state of the Massachusetts economy can be found in the most recent issue of MassBenchmarks.
For more information, please contact:
Dr. Robert Nakosteen |
|
Dr. Alan Clayton-Matthews |
MassBenchmarks Regional Analysts
ECONOMIC INDICES |
GREATER BOSTON |
For timely and comprehensive analysis of the Massachusetts economy, please visit MassBenchmarks at www.massbenchmarks.org.
