Report Identifies 'Major Concern' in Otherwise Booming MA Economy

The Donahue Institute at the University of Massachusetts, named in honor of the late Maurice A. Donahue of Holyoke, who served as president of the Massachusetts Senate (1964-71) and ran unsuccessfully for governor in the 1970 Democratic primary, issues a quarterly report on the state of our economy called MassBenchmarks. The latest one came out this past Friday, July 27, describing, in unequivocal detail, a Massachusetts economy that had expanded at a “torrid pace” in April, May and June.

“The Massachusetts economy accelerated sharply in the second quarter,” the report states, “bucking the expectation of slower growth due to low unemployment and demographic constraints.” 

Here are some highlights:

-The state’s gross domestic product grew at a 7.3% annualized rate while, nationally, it increased by 4.1%.
 
-The number of payroll jobs expanded at a rate of 2.9%, compared to a 1.7% rate for the rest of the U.S.

-Wage and salary income, as measured by state tax collections, grew by 6.2%.

-Consumer spending grew by 6.7%, as measured by regular sales tax receipts and motor vehicle sales taxes.

-Unemployment remained at “a near historical low” of 3.5%.

Job growth in the technology and knowledge-based sectors was especially strong, the report noted, and many of the new jobs in these areas “were filled by workers who either migrated to the state or remained in the state after moving here to go to college.”

The incomes “generated by these relatively well-paid jobs,” the report said, “can be expected to boost demand for jobs in all sectors, many of them in more moderately-paid or lower-paid service roles.”

In the category of job growth, however, the report did identify a “major concern” going forward: the capacity of the state to “provide all of these new workers with adequate housing and transportation options...”  What that means, obviously, is:

If mass transit (MBTA and commuter rail) is not seriously upgraded, if traffic congestion in and around Boston is not at least somewhat mitigated, and if the supply of housing in eastern Massachusetts is not sufficiently expanded to halt the so-far-unstoppable rise in housing prices, we won’t be able to attract and keep the highly educated and skilled workforce that is now the main driver of our economy.

MassBenchmarks is published by the Donahue Institute in cooperation with the Federal Reserve Bank of Boston.

For more on the report, go to:

http://www.massbenchmarks.org