MassBenchmarks board optimistic about Mass. economy

BOSTON – The outlook for the Massachusetts economy is “strongly positive,” thanks to the improving national economy and falling gasoline prices, according to the MassBenchmarks editorial board.

The board, which met earlier this month, also said that state job growth has remained steady, noting that software, information technology and staffing services sectors are doing well and that previously discouraged workers have re-entered the labor force.

The board said that Massachusetts’ labor force has grown consistently since June.

The Commonwealth has the “fastest growing population” in New England, and the Northeast, the board said. That is largely a result of international immigration and a lower level of domestic net outmigration than has been experienced in recent recoveries.

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The board acknowledged that significant challenges remain.

“Electricity prices in Massachusetts are expected to rise steeply this winter largely as a result of the New England region’s ongoing difficulties in accessing a sufficient supply of natural gas to power its electricity generators. Rising electricity prices can be expected to partially offset the beneficial effects of the drop in oil prices and will create significant financial challenges for energy intensive industrial users,” the board said.

The board also said that federal government expenditures – an important funding source for private sector contractors and nonprofit research institutions such as universities and hospitals – will continue to be squeezed.
And while stagnant European growth and slowing Asian expansion may slow global trade, the board said recent research suggests that the Commonwealth will be less affected by those trends as its economy continues to be driven by high-end services, research and development and technology-intensive enterprises that serve domestic markets, the board said.

The board said young workers being paid low wages and being burdened by student loans, making them unable to support a mortgage, are some of the reasons why housing production has yet to fully recover in Massachusetts and across the nation.

Despite the challenges, the board is optimistic, and said the Massachusetts economy continues to experience solid economic growth, particularly in the Greater Boston region, with prospects for continued growth remaining strong.

“After a weak first quarter of the year, the Massachusetts economy has rebounded strongly. While there continue to be serious concerns about the geographically and financially imbalanced nature of this recovery, the MassBenchmarks Editorial Board is as optimistic as it has been in some time and expects the state’s economic expansion to continue for the foreseeable future,” they wrote.

MassBenchmarks is the journal of the Massachusetts economy and is published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

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