Report shows Mass. economy slumps in 2nd quarterAP , Associated Press
Jul. 31, 2013 1:39 PM ET
BOSTON (AP) — The Massachusetts economy slowed sharply during the second quarter and failed to match the pace of growth on the national level, according to an economic index released Wednesday.
The state's Gross Domestic Product grew at an annual rate of 0.8 percent from April to June, according to MassBenchmarks. By contrast, the state's economy grew at an annual rate of 2.8 percent during the first quarter of 2013.
The nation's GDP grew at a rate of 1.7 percent in the second quarter, up from 1.1 percent in the January-March quarter, the U.S. Labor Department reported Wednesday.
Several fundamental measures of economic growth, including employment, earning and consumer spending, slumped in the second quarter after showing strong improvement in previous quarter, said economists writing for MassBenchmarks, a journal of the state's economy published by the Donahue Institute at the University of Massachusetts.
While state payroll employment grew at a 3 percent annual rate in the first quarter, it declined 0.1 percent in the second quarter, according to the latest index. Wage and salary income, which surged nearly 20 percent in the first quarter, tumbled nearly 7 percent in the most recent three-month period.
The economists said it appeared Massachusetts was absorbing a disproportionate share of automatic federal budget cuts known as sequestration that went into effect this year. They noted that the state is heavily reliant on federal funds for research and development at the state's renowned hospitals and universities, and for its defense-related industries.
"The recent rise in unemployment is particularly disconcerting," said Dr. Alan Clayton-Matthews, a Northeastern University economist and senior contributing editor for MassBenchmarks.
The state's unemployment rate climbed to 7 percent in June, up from 6.6 percent in May and the highest rate since November 2011.
State officials were quick to point out, however, that Massachusetts had added more than 20,000 jobs since the start of the year, according to the federal Bureau of Labor Statistics, and that job growth continued in May and June.
MassBenchmarks was more optimistic about the state economy going forward, saying it expected GDP growth of 2.8 percent in the July-September quarter and to 3.1 percent in the fourth quarter.