MassBenchmarks Report Optimistic About Area’s Economic Prospects
HADLEY — The state’s workforce and job seekers have reason for optimism, according to the economists behind MassBenchmarks, a study of the state’s economy prepared by the UMass Donahue Institute.
“State gross product growth has kept pace with strong national growth for the past two quarters,” according to the report. “State job growth has been steady, with software, information technology, and staffing-services sectors doing well. The Commonwealth’s labor force has grown consistently since June, as workers who were previously discouraged re-enter the labor market. And strikingly, Massachusetts has the fastest-growing population not only in New England, but in all of the Northeastern U.S. This is in large part due to international immigration and a lower level of domestic net outmigration than has been experienced in recent recoveries.”
The state also appears to be benefiting from a national economic expansion that is gaining traction. The national jobs report for October was strong, with more than 300,000 jobs added, an increase in the average workweek, modestly rising wages, and upward revisions in job growth for August and September. Falling oil and gas prices are putting more money in the pockets of consumers and lowering business costs.
Still, challenges remain, the report notes. “Electricity prices in Massachusetts are expected to rise steeply this winter largely as a result of the New England region’s ongoing difficulties in accessing a sufficient supply of natural gas to power its electricity generators. Rising electricity prices can be expected to partially offset the beneficial effects of the drop in oil prices and will create significant financial challenges for energy-intensive industrial users. Federal-government expenditures, long an important funding source for a variety of private-sector contractors and nonprofit research institutions (universities and hospitals), will continue to be squeezed. And, absent action on the part of the incoming governor and Legislature, state infrastructure spending will be significantly constrained in coming years now that state voters have determined that the gas tax will not be indexed to inflation.” In addition, housing production, especially single-family units, remains well below pre-Great Recession levels.
“Despite these challenges,” the report goes on, “the Massachusetts economy continues to experience solid economic growth, particularly in the Greater Boston region, and the prospects for continued growth remain strong. After a weak first quarter of the year, the Massachusetts economy has rebounded strongly. While there continue to be serious concerns about the geographically and financially imbalanced nature of this recovery, the MassBenchmarks editorial board is as optimistic as it has been in some time and expects the state’s economic expansion to continue for the foreseeable future.”
