Massachusetts economy resilient in 1Q, despite severe weather

MASSBENCHMARKS said that Massachusetts real gross domestic product grew at an estimated annual rate of 0.9 percent during the first quarter. The Massachusetts Leading Economic Index for March also was 4.4 percent. / COURTESY MASSBENCHMARKS
MASSBENCHMARKS said that Massachusetts real gross domestic product grew at an estimated annual rate of 0.9 percent during the first quarter. The Massachusetts Leading Economic Index for March also was 4.4 percent. / COURTESY MASSBENCHMARKS

BOSTON – Despite record snowfall and weak global economic conditions, the Massachusetts economy proved to be resilient in the first quarter, according to the MassBenchmarks Current Economic Index.
Published by the University of Massachusetts Donahue Institute in collaboration with the Federal Reserve Bank of Boston, the report states that Massachusetts real gross domestic product grew at an estimated annual rate of 0.9 percent in the first quarter, which is higher than the U.S. rate of 0.2 percent for the same period.
The report highlighted other economic indicators. For example, in the first quarter, Massachusetts payroll employment expanded at a 1.6 percent annual rate, below the national rate of 2.2 percent for the same period.
The state’s unemployment rate declined by half a percentage point in the first quarter, from 5.3 percent in December to 4.8 percent in March, which is lower than the national rate. During the same period, the U.S. unemployment rate fell from 5.6 percent to 5.5 percent.
“While the economic tide continued to rise in the first quarter, it is still not lifting all boats,” Alan Clayton-Matthews, MassBenchmarks senior contributing editor and associate professor of economics and public policy at Northeastern University, said in a statement.
Despite the severe winter weather, Massachusetts income and spending continued to grow in the first quarter of 2015, according to the report.

State withholding tax receipts indicated that wage and salary income in Massachusetts expanded at a 4.8 percent annualized rate in the first quarter. However, that decreased from a “robust 10.7 percent annualized rate in the fourth quarter of 2014,” the report states.
February’s record snowfall affected state sales tax collections, which dropped sharply for both automobiles and other items subject to the regular sales tax. Still, spending on those taxable items continued to expand in the first quarter, growing at a 1.8 percent annualized rate in the first quarter. The previous quarter experienced a 7.4 percent growth rate.
The report said export growth may remain weak all year as a result of the strong dollar and relatively weak prospects for international growth.
The report also included revised data for the fourth quarter of 2014, in which the state economy grew at a 2.9 percent annualized rate, a decrease from the previously reported rate of 4.7 percent.

“This adjustment is due to a decline of 0.8 percentage points in estimated productivity growth and a decline of 1.0 percentage points that is largely the result of downward revisions to state job growth in November and December,” the report stated.

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