MassBenchmarks: State growth outpaces nation in 2Q

By PBN Staff
Twitter: @ProvBusNews

BOSTON – Massachusetts’ real gross state product increased at a 4 percent annualized rate during the second quarter, according to the Current Economic Index released Friday by MassBenchmarks.

According to the report, which is published by the University of Massachusetts Donahue Institute in collaboration with the Federal Reserve Bank of Boston, the U.S. real gross domestic product grew at a 1.5 percent annualized rate during the same period.

Massachusetts’ labor market continued to strengthen in the second quarter though at a slower pace than the first, according to the report.

The Bay State’s unemployment rate fell 0.5 percentage points during the quarter, from 6.5 percent in March to 6.0 percent in June.

Comparatively, the U.S. unemployment rate ended June where it began, at 8.2 percent.

During the first quarter, Massachusetts’ economy grew at an estimated 4 percent rate compared to the 2 percent rate reported for the whole of the U.S. and on June 5, the U.S. Bureau of Economic Analysis

“Long-term unemployment and underemployment continue to be major challenges for the Commonwealth and the nation,” said the report. “In June, the broader U6 measure of unemployment - which includes discouraged and marginally attached workers, and those working part-time because they can't find full-time work - was 12.2 percent in Massachusetts and 14.9 percent nationally.”

Massachusetts’ payroll employment growth slowed to a 1.4 percent annual rate during the second quarter, after growing at a 2.7 percent rate during the first three months of the year. Payroll-employment growth nationwide also slowed, from 2.1 percent in the first quarter to 1 percent in the second quarter.

Consumer spending on items subject to regular sales tax and motor vehicle sales tax grew at a 6.5 percent annual rate in the second quarter after falling by a 10.9 percent rate in the first quarter.

The report’s leading index projected moderate slowdown in the state’s economic growth during the second half of the year, expecting growth to drop to 3.7 percent in the third quarter and 3.6 percent in the fourth quarter.

“There is substantial downside risk to this outlook, due to weakness in Europe, slowing growth in China, weak growth in the U.S. economy and uncertainty about whether and how the looming ‘fiscal cliff’ coming in 2013 will be resolved,” Alan Clayton-Matthews, MassBenchmarks senior contributing editor said in the report.

“One indication of the drag Europe is having on the state’s economy is visible in Massachusetts merchandise exports, which are down 1.3 percent in the first five months of this year relative to a year ago. Merchandise exports for the U.S. as a whole, which is less reliant on Europe, are up 6.8 percent over the same period of time,” added Martin Romitti, MassBenchmarks managing editor.