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By PBN Staff
By PBN Staff
HADLEY, Mass. – Massachusetts economic growth slowed in the first quarter, but far outpaced U.S. gross domestic product growth for the same period, local economy journal MassBenchmarks reported in its Current Economic Index Thursday.
The Bay State had an annual growth rate of 2.6 percent in its real GDP in the first quarter, dropping from the revised fourth-quarter growth rate of 4.4 percent. This compares with a drop in the national GDP from 2.6 percent in the fourth quarter to 0.1 percent in the first quarter.
“The relatively strong growth for Massachusetts in the first quarter reflects a moderate increase in employment, a sharp fall in the unemployment rate, very strong wage and salary income growth, and increased spending by households and businesses,” said Alan Clayton-Matthews, MassBenchmarks senior contributing editor, who compiles and analyzes the MassBenchmarks indexes.
Among specific economic indicators, the wage and salary incomes grew at an annual rate of 15 percent in the first quarter compared with 12.3 percent in the fourth quarter, while spending on products tied to state regular sales and motor vehicle sales taxes declined from 9.2 percent growth to 6.1 percent growth.
“Wage and salary income growth in the last two quarters have likely been boosted by better-than-average bonuses for workers as a result of the sharp rise in stock markets last year,” said Clayton-Matthews.
In addition, the Massachusetts economy appeared to benefit from improving conditions in national and international economies, the MassBenchmarks report stated. Merchandise exports from Massachusetts were 4.6 percent higher last year than in 2012, while national exports rose 2.1 percent.
State payroll employment grew 1.2 percent in the first three months of 2014, dropping from 3 percent growth in the three months ended Dec. 31.
The report’s Leading Economic Index, which forecasts the annual rate of economic growth over the next six months, predicted an annual growth rate of 4.1 percent between March 2014 and September 2014.
In March, six indicators contributed to a forecast of above-trend growth: total nonagricultural employment, withholding taxes, sales taxes, unemployment rate, the interest rate spread between 10-year and 3-month U.S. Treasury securities, and motor vehicle sales taxes.
MassBenchmarks is published by the University of Massachusetts Donahue Institute in conjunction with the Federal Reserve Bank of Boston.