PROVIDENCE – Massachusetts’ gross domestic product increased at a 7.9% annual rate in the fourth quarter, faster than the nation’s annualized rate of 4%, MassBenchmarks said on Thursday.
GDP in Massachusetts had increased at a 33.1% annualized rate in the third quarter. MassBenchmarks said that the slowdown was expected in the fourth quarter and, “reflects a transition of a very strong growth associated with the reopening of much of the economy during the summer,” as well as the return of a spike in COVID-19 cases.
The report also cited a decline in income, including unemployment compensation, as federal COVID-19 aid waned.
Payroll employment in the Bay State increased at a 7.8% annual rate in the fourth quarter, faster than the national rate of 5.2%. Wage and salary growth in the state increased at a 26.1% annualized rate, compared with an 8.9% annualized rate in the quarter.
“The stark contrast between the return of payroll income to pre-pandemic levels and the lack of a commensurate return of employment to pre-pandemic levels reflects the inequality of the economic impact of the pandemic on different industrial sectors and workers,” said Alan Clayton-Matthews, MassBenchmarks senior contributing editor and professor emeritus of economics and public policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes.
“Low-wage sectors such as leisure and hospitality and personal services were hit the hardest in the shutdown and remain the sectors experiencing the slowest employment recovery,” Clayton-Matthews added.
The report also noted that the pandemic’s impact has been more severe for women than men in Massachusetts, with the number of unemployed individuals increasing 64% more for women than for men. The size of the labor force for women was also roughly twice that for men, the report said.
MassBenchmarks said that the slowdown in GDP growth at the end of the fourth quarter was expected to continue into the first quarter of 2021, as COVID-19 cases are expected to remain elevated. The slowdown was expected to be offset by an increase in the vaccinated population and the impacts of the federal stimulus passed in late December.
MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston.
