MassBenchmarks: Bay State economic growth picks up in 3Q
THE MASSACHUSETTS ECONOMY grew more quickly in the third quarter of 2013 due to strong consumer and business spending and the recovering housing market, according to the MassBenchmarks Current Economic Index.
HADLEY, Mass. – Growth in the Massachusetts economy accelerated in the third quarter, bolstered by a recovering housing market, and consumer and business spending, local economy journal MassBenchmarks reported in its Current Economic Index Thursday.
The Bay State had an annual growth rate of 3.5 percent in its real gross domestic product in the third quarter, up from the revised second-quarter growth rate of 1.7 percent. This compares with a rise in the national GDP from 2.5 percent in the second quarter to 2.8 percent in the third quarter.
However, the Massachusetts third-quarter figure is based on incomplete data due to the late release of the state’s September employment report, which was delayed until Nov. 22 as a result of last month’s federal government shutdown.
“Of the four Massachusetts economic indicators used to estimate state GDP growth, only September payroll employment is missing,” said Alan Clayton-Matthews, MassBenchmarks senior contributing editor. “To fill that gap, we have estimated the missing data using the U.S. employment report for September and the historical average relationship between national and Massachusetts state employment.”
Using this method, MassBenchmarks determined that Massachusetts added 1,000 jobs in September, indicating that state employment rose at an annual growth rate of 0.7 percent in the three months ended Sept. 30, compared with a 0.3 percent decline in the second quarter.
The report attributed the pickup in Massachusetts’ economy to “slow but better” job growth, rising wage and salary incomes, and a higher rate of spending on items subject to sales taxes.
Among specific economic indicators, the wage and salary income growth rate was 2.9 percent in the third quarter, up from a 6.9 percent decline the previous quarter, and dollars spent on products tied to state regular sales and motor vehicle sales taxes increased from 2 percent growth to 6.5 percent growth.
The report’s Leading Economic Index, which forecasts the annual rate of economic growth over the next six months, was 3.4 percent in September, predicting an annual growth rate of 3.4 percent between October 2013 and March 2014.
“The indicators on which the Leading Index is based, however, do not incorporate the effects of the federal government shutdown and its after-effects (including the continuation of sequestration spending reductions), since most of the information on which the index is based was collected through September, before the shutdown began,” the report stated. “Therefore, fourth-quarter growth will likely be several tenths of a percentage point lower than the 3.4 percent projected by the Index.”
MassBenchmarks is published by the University of Massachusetts Donahue Institute in conjunction with the Federal Reserve Bank of Boston.