GDP Rises In Q3 But Mass. Economic Growth Slows
Gross domestic product increased in the third quarter in Massachusetts and nationwide, according to reports issued today by the UMass Donahue Institute and the U.S. Bureau of Economic Analysis.
In Massachusetts, GDP grew by 1.9 percent, just shy of the nationwide growth rate of 2 percent, according to the reports.
The state’s GDP has been on the upswing in 2012, growing 2 percent and 3 percent in the first and second quarters, respectively. Nationwide GDP climbed 2 percent in the first quarter and 1.3 percent in the second quarter, as well.
But an ebb in state economic growth in the second quarter continued in the third, according to MassBenchmarks, an economic journal published by the Donahue Institute.
The state economy slowed sharply in the third quarter due to pressure from the troubled European economy, according to MassBenchmarks. The report points to a number of indicators of slowing growth,
Payroll employment growth slowed from an annualized rate of 1.6 percent in the second quarter to .2 percent in the third, and the unemployment rate increased by half a percentage point, from 6 percent in June to 6.5 percent in September.
Spending on items subject to sales and motor vehicle tax also decline by 1.5 percent in the second quarter.
State merchandise exports also decline 5.9 percent year over year in the third quarter, while U.S. exports grew 5.6 percent in the same period. This is an indication, according to MassBenchmarks, that Massachusetts has a higher reliance on Europe as an export destination. Specifically, demand for information technology and semiconductor sales have decline.
At this rate, Massachusetts GDP is expected to grow 2.3 percent in the fourth quarter of 2012 and the first quarter of 2013, according to Dr. Alan Clayton-Matthews, MassBenchmarks senior contributing editor. And that means employment will likely stagnate.
“Given expected productivity growth, this trend is consistent with an expectation of virtually no net employment growth in Massachusetts over the next six months," Clayton-Matthews said.
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