MassBenchmarks: State Economy Slowing
The Massachusetts economy is showing signs of slower growth, restrained by deteriorating global economic conditions that appear to be impacting the state’s innovation sector, according to the editorial board of MassBenchmarks, an economic journal published by the Donahue Institute at the University of Massachusetts.
The global economy has helped propel innovation as a growth driver in the state in recent years, the board said. And it warned that “a series of economic ‘headwinds’ poses serious risks to the sustainability of the state and national recoveries, and there is considerable economic uncertainty” in Massachusetts and throughout the United States.
As an example, the board pointed to a drop in worldwide sales of silicon computer chips.
“U.S. firms' investment in information and processing equipment and software has been essentially stagnant in the first two quarters of this year. Massachusetts merchandise exports, which include the state's IT products, are down from last year. To date, the softening in worldwide demand for IT products and services appears not to have made a dent in Massachusetts jobs.”
However, the board said job losses in the Bay States over the past few months have been concentrated in construction, retail trade, non-technical business services, leisure and hospitality, and private education, which reflects weak demand from both consumers and businesses.
Apart from IT, other segments of the state's innovation economy appear to remain strong, especially life sciences, the board said.
Looking ahead, the MassBenchmarks board provided these warnings:
The “fiscal cliff” in Washington
The potential for “simultaneous and precipitous federal tax increases and expenditure cuts” looms at the end of the year, the board said. “While there is wide agreement that … jumping off this ‘cliff’ would have serious negative economic consequences … there is little indication that our political institutions are capable of doing what is necessary to avoid this outcome.”
The global economy
The impact of slowing growth in China, as well as recession in key parts of Europe can be seen in the slowing of trade between Massachusetts and those regions, which represent important export markets for the commonwealth and whose demand for the state's medical and technology products and professional and business services has played a big part in the state's economic success in recent years.
WBJ Web Partners
Most Recent
Most Recent
0 Comments