Mass. economy expands at greater pace than U.S. through June

THE MASSBENCHMARKS CURRENT ECONOMIC INDEX, released Thursday, shows strong growth in the second quarter in the Bay State, as well as continued strong growth through the rest of the year. / COURTESY MASSBENCHMARKS
THE MASSBENCHMARKS CURRENT ECONOMIC INDEX, released Thursday, shows strong growth in the second quarter in the Bay State, as well as continued strong growth through the rest of the year. / COURTESY MASSBENCHMARKS

BOSTON – With unemployment in Massachusetts reaching pre-recession levels, the state’s economy is humming along, according to MassBenchmarks. In the second quarter, the Bay State posted an estimated annual growth rate of 5.4 percent, more than double that of the U.S. economy, which was estimated to have expanded at a 2.3 percent annual rate in the period, according to the latest U.S. Commerce Department data released Thursday.
In addition, the MassBenchmarks Leading Economic Index for June was reported to be 4.8 percent, meaning that the authors of the report, the UMass Donahue Institute and the Federal Reserve Bank of Boston, expect that state to expand at that rate for the balance of the year.
One result of the strong growth of the state’s economy has been a continuing drop in the unemployment rate, which fell to 4.6 percent in June from 4.8 percent in March, well below the nation’s 5.3 percent rate last month. In fact, employment grew at a 3.1 percent annual rate in the second quarter, nearly double the first quarter’s 1.7 percent annualized growth.
“The rising tide appears to finally be lifting the boats of the long-term unemployed, even though conditions for these workers remain difficult,” said Alan Clayton-Matthews, MassBenchmarks senior contributing editor and assistant professor of economics and public policy at Northeastern University.
For example, the U-6 unemployment measure, which includes part-time workers looking for full-time work and unemployed, fell significantly as well. “For the 12-month period ending in June, the Massachusetts U-6 rate fell to 10.4 percent, a 0.6 percentage point drop from the 12-month period ending in March. In June, Current Population Survey-based estimates put the Massachusetts U-6 rate at 9.7 percent. The corresponding U.S. rate in June was 10.5 percent,” Clayton-Matthews added.
In addition to the second-quarter rebound from the weak, poor weather-induced performance in the first three months of 2015, personal income and spending showed strength as well. Using withholding tax revenue, the MassBenchmarks team estimated the wage and salary income grew at a 4.8 percent annual rate in the second quarter (following 4.8 percent growth in the first quarter).
But consumer and business spending, estimated by the state’s regular and motor vehicle sales tax, grew at a 19.3 percent annual rate, following a 1.8 percent annualized growth rate in the first three months of the year. “The ability and willingness of households and businesses to spend reflects the underlying strength of the state economy and bodes well for future growth,” said the report.

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