Massachusetts economy emitting ‘mixed signals’

BOSTON – The Massachusetts economy is “emitting mixed signals,” according to the latest MassBenchmarks Current Economic Index.

The index, released Wednesday, reflects the discussion of the MassBenchmarks editorial board at its Jan. 29 meeting.
MassBenchmarks is the journal of the Massachusetts economy published by the University of Massachusetts Donahue Institute in collaboration with the Federal Reserve Bank of Boston. The report said that the state is adding jobs at a “brisk pace,” but the growth in gross state product slowed during the second half of last year, reflecting national economic trends.
Still, it said the state continues to outperform the national economy, and pointed to an industry mix of high technology and knowledge-based companies that have helped offset slow global growth and national declines in consumer spending.
Consumer spending in Massachusetts, measured by state sales tax receipts, remains strong, the report said. It noted that the jobless rate has fallen below 5 percent, but the state’s labor force participation rate also decreased over the past year, “suggesting that regional labor markets may yet contain some slack.”
And growth continues to be uneven across the state, with the Greater Boston area experiencing better economic performance than other regions.
Among the regions, the Boston area also ranks the most unequal in income. According to the Brookings Institution, Boston has the highest income inequality of any major city in the country, the report said.
Another issue it identified as a “potentially troubling development” was lower than expected tax revenue, partially due to the “disappointing performance” of the Plainridge Park casino.
“The most important challenges for the state involve long-term issues, which will require significant investments,” the report said, singling out aging transportation infrastructure as one of them.
It said the state’s transportation challenges were “vividly illustrated” during last year’s “record-breaking winter.” Neglected infrastructure investments have been identified in the months since, it said.
“With interest rates near historic lows, failing to make strategic investments in critical infrastructure projects that offer high returns represents a significant, missed opportunity for the commonwealth,” the report said.
“Bottom line, the state economy is doing well despite the global setting of slowing economic growth and rising uncertainty. … It will take political will and creative approaches to make the necessary investments to meet Massachusetts’ long-term challenges. And the longer the delay, the more expensive the job will become,” it stated.

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