BOSTON – Massachusetts, according to the latest economic report by MassBenchmarks, is “experiencing good economic fortunes in an environment characterized by worrisome global conditions.”
The report pointed to slow economic growth in China and resulting negative impacts in countries that export commodities to that country.
“Global debt issues further cloud prospects for the future. There has been a run-up of dollar-denominated private debt in many emerging markets and, as their economic prospects have declined, increasing concern that we may be on the verge of a new debt crisis,” the report said.
Meanwhile, Massachusetts’ real gross domestic product growth outpaced national real gross domestic product growth in the first quarter, 2.3 percent compared with 0.5 percent, according to the MassBenchmarks Current Economic Index released this week; it is published by the University of Massachusetts Donahue Institute and Federal Reserve Bank of Boston.
The pace of economic growth in Massachusetts picked up in the first three months of 2016 after slowing in the second half of 2015, the report said.
Employment and earnings recorded strong growth, while the unemployment rate fell. Payroll employment grew at a 2 percent annual rate in the first quarter, an increase from 0.7 percent in the prior quarter. Wage and salary income, as estimated from state withholding tax revenue, expanded 5.6 percent in the first quarter, after falling 7 percent in the final three months of last year.
The state’s unemployment rate was 4.4 percent in March, a drop from 4.9 percent in December, and 5.1 percent in March 2015. The rate was lower than the U.S. unemployment rate for March at 5 percent, the same as in December. The national unemployment rate was 5.5 percent in March 2015.
The unemployment rate in Massachusetts is now lower than its pre-recession low of 4.6 percent in 2007, the report said.
“But this overall strong performance continues to mask troubling imbalances in the labor market,” the report said.
Another measure of unemployment, including those who are working part-time but want full-time work, as well as those who are marginally attached to the labor force, is still “significantly above pre-recession levels,” it said. That rate fell to 9.3 percent in March from 9.5 percent in December and 9.8 percent in March 2015. The U.S. rate in March was 9.8 percent, a decrease from 10.9 percent in March 2015. Prior to the recession in 2007, this measure reached lows of 7.1 percent in Massachusetts and 8 percent in the U.S.
Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of economics and public policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes, also said spending on items subject to the state regular sales tax declined 6.3 percent in the first quarter, “in stark contrast to the very strong growth of 9.5 percent experienced in the fourth quarter of 2015.”
“Year over year, spending is up 3.5 percent,” he said. “Most of the drop this quarter was due to spending on automobiles, which slowed after expanding strongly at the end of 2015, and also to weak spending on other taxable sales items in February.”
The MassBenchmarks Leading Economic Index is projecting that the state economy will continue to grow at a moderate pace over the next six months, at a 3.1 percent rate in the second quarter, and a 2.5 percent rate in the third quarter of this year. The factors weighing on the state and national economic outlook have changed little from last quarter, the report said.
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