MassBenchmarks: Mass. GDP in Q3 declines slightly, stagnant growth projected

BOSTON – The Massachusetts Current Economic Index increased 3.1% year over year at the end of the third quarter, MassBenchmarks said Wednesday.

However, the report said real GDP declined in the quarter, falling at a 0.2% annualized rate. The slowdown was expected to continue into the next quarter as well, as leading indicators projected a GDP growth rate of 0.1% with “virtually no growth projected for the first quarter of 2020 as well.”

The report said the slowdown in growth was not indicative of a recession, but “rather reflects capacity barriers that the state is bumping up against,” such as the retirement of the Baby Boomer generation, stymieing labor force growth.

The report noted that the state continued a longstanding trend of slowing payroll employment growth, as it increased at a 0.6% annual rate in the third quarter, half of the national rate. The slowdown also included wage and salary income, which declined at a 4.3% annual rate in the quarter.

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“State economic growth is slowing as the aging of the workforce exerts a drag on our growth, and since Massachusetts has an older population than the nation, the drag is greater here,” said MassBenchmarks Senior Contributing Editor and Associate Professor of Economics and Public Policy at Northeastern University Alan Clayton-Matthews, who compiles and analyzes the Current and Leading Indexes.

MassBenchmarks also noted that unemployment in the state ticked down to near record levels at the end of the quarter. Massachusetts, which had a 3.5% unemployment in September, was said to have a lower unemployment rate than the U.S. 3.7% rate due to higher educational attainment levels.

MassBenchmarks is a University of Massachusetts Donahue Institute publication created in tandem with the Federal Reserve Bank of Boston.