HADLEY, Mass. – Growth in the Massachusetts economy slowed considerably in the second quarter of 2013, hamstrung in particular by austerity measures by the federal government, local economy journal MassBenchmarks reported in its Current Economic Index Wednesday.
The Bay State had an annual growth rate of 0.8 percent in its real gross domestic product in the second quarter, a steep decline from the 2.8 percent annual growth rate in the first quarter of the year. In contrast, the national growth rate rose from 1.1 percent in the first quarter to 1.7 percent in the second quarter.
The state’s unemployment rate jumped from 6.4 percent in March to 7.0 percent in June, with the burden felt across many demographic groups but particularly among younger and less educated workers.
The report attributed much of the Massachusetts slowdown to the federal budget cuts known as sequestration. The cuts disproportionately affected the state due to its large share of hospitals, universities and government and defense contractors, many of which rely on federal funding, the report said.
Among specific economic indicators, state payroll employment fell from a 3.0 percent annual growth rate in the first quarter of 2013 to a 0.1 percent decline in the second quarter. Wage and salary income dropped from 19.8 percent growth to 6.9 percent growth, and dollars spent on products tied to state regular sales and motor vehicle sales taxes slowed from 11.8 percent growth to 2.0 percent growth.
The report’s Leading Economic Index, which forecasts the annual growth rate over the next six months, was 3.1 percent in June. It predicted a return to a 2.8 percent annual growth rate in the third quarter of 2013 and a 3.1 percent annual growth rate in the fourth quarter. But
Despite several improvements in the recovering economy, the extent to which federal budget cuts might slow future growth is still unknown, said the report.
MassBenchmarks is published by the University of Massachusetts Donahue Institute in conjunction with the Federal Reserve Bank of Boston.
PBN's annual Book of Lists has been an essential resource for the local business community for almost 30 years. The Book of Lists features a wealth of company rankings from a variety of fields and industries, including banking, health care, real estate, law, hospitality, education, not-for-profits, technology and many more.