Economic forecast 2007
Some of the best dreams of our region and state came true in 2006. Development projects all over Central Mass. were proposed, started or came to fruition. They include CitySquare and Gateway Park in downtown Worcester, and the Bristol Myers Squibb plant that's taking shape in Devens. They also include the opening of the long-awaited Worcester Technical High School. And the state signed into law the closest thing this country has seen to universal health care. Now, all we have to do is to make it all work.
That’s the tough part. Along with the dreams fulfilled, some disturbing trends came home to roost. Most notably, the state’s housing market cooled off, with prices dropping and homes staying on the market longer. Foreclosures jumped in the state, and in November, Massachusetts was second in the country only to Alabama in the percentage rise of foreclosures (299 percent for Mass. versus 466 percent for Alabama) from November 2005. Other troubling research findings reveal a continued exodus of young workers in 2006. This year will likely be the third consecutive year that the state's labor force shrinks.
But visiting our sectors in the order in which they appear in this forecast, there’s plenty of optimism. The multifaceted technology sector had probably the best year it's seen since before the dot-com bust. A burst of IPOs replenished the region’s public company base, which had been winnowed by a series of acquisitions. Other tech companies successfully completed financing rounds.
In the biomedical field, the pressure on big pharma to find new drugs has been a boon for regional contract research organizations and drug-development equipment firms. It’s also led to the rise of smaller life-science companies that explore new applications of existing drugs.
In health care, the story this year was about the state’s Health Reform Act, which the whole country is watching. The increased adoption of electronic medical records holds out promise to control at least some of the cost of health care - and to improve the quality of care, as well.
The region’s higher education community is bearing the full brunt of Massachusetts' workforce dilemma as local higher education institutions seek to meet the needs of business for trained workers - preferably workers who will stay in the area after graduation.
Manufacturing’s growth has been internal and organic, with major expansion coming from companies that are already here. That is, until this past June, when pharma giant Bristol-Myers Squibb Co. chose Devens for a $660 million manufacturing facility.
Banking presents a mixed picture. Economic conditions that don’t reward longer-term investments with higher yields continue to dog the industry, and the region’s housing slump has bankers on the alert. Nevertheless, they anticipate slow, steady growth in 2007 as many plan new branches or mergers with equals in order to gain market share.
Commercial real estate had a good year and is expected to continue that way in 2007, as new players from outside the region make investments here.
The face of retail is changing due to online shopping, but bricks and mortar are still very much in demand. Mixed-use developments that combine residential and shopping came into vogue in 2006, along with so-called "lifestyle" malls, which seek to get the shopper to spend the day.
Read these forecasts and you'll see a cross-section of the intense activity that characterizes Central Massachusetts. And have a Happy New Year.
WBJ Web Partners
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