Mass. economic growth moderates in 3Q following strong 2Q

MASSACHUSETTS REAL gross domestic product grew at an estimated annual rate of 2 percent in the third quarter, according to the MassBenchmarks Current Economic Index.
MASSACHUSETTS REAL gross domestic product grew at an estimated annual rate of 2 percent in the third quarter, according to the MassBenchmarks Current Economic Index.

BOSTON – Real gross domestic product increased at an estimated annual rate of 2 percent in the third quarter in Massachusetts, according to the MassBenchmarks Current Economic Index released Thursday.
MassBenchmarks, the journal of the Massachusetts economy published by the University of Massachusetts Donahue Institute in collaboration with the Federal Reserve Bank of Boston, said that the Massachusetts rate exceeded the national rate of 1.5 percent, continuing a pattern set during the first and second quarters.
The Massachusetts GDP expanded at a 7.1 percent annualized rate in the second quarter, while the nation’s rate was 3.9 percent. In the first quarter, Massachusetts’ economy increased at a 3.2 percent rate, compared with the nation’s 0.6 percent rate.
MassBenchmarks noted that third-quarter growth “moderated significantly” following an “exceptionally strong” second quarter.
“Much of the decline in the pace of growth was due to slower productivity growth rather than a weakening in the fundamental underlying strength of the regional economy,” MassBenchmarks said.
However, MassBenchmarks’ Leading Economic Index said that the state’s “solid economic performance” will continue through the rest of the year and into the next.

The journal said that state payroll employment decreased by an estimated 7,100 jobs in September, but the state job market remains strong.

In the third quarter, the state’s payroll employment grew at a 2.2 percent annual rate, compared with 3 percent growth in the second quarter. In comparison, U.S. payroll employment grew at a 1.7 annual rate in the third quarter, matching the second quarter’s growth rate.
The state’s unemployment rate was 4.6 percent in September, while the U.S. unemployment rate was 5.1 percent.
“In the third quarter, the number of initial unemployment claims in the state continued to trend downward,” 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, said in a statement. “In September, on a seasonally-adjusted basis, the number of new unemployment claims in the state was the lowest on record – which dates back to January 1973.”
On a year-over-year basis, Massachusetts wage and salary income in the third quarter rose 5.8 percent. Nationally, wage and salary income is expected to grow at a 5 percent annualized rate in the third quarter, double the second quarter’s 2.5 percent rate.
One area that declined in the third quarter was consumer and business spending. Measured by spending on items subject to the state regular sales tax and the motor vehicle sales tax, this declined 3.4 percent, something MassBenchmarks called “a return to reality” following an “unsustainable” 15.8 percent annualized rate of growth in the second quarter.
In addition, this measure of state consumer spending was 4.9 percent higher in the third quarter than it was in the third quarter of 2014, the journal said.

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