March 13, 2008
Panel: State Economy Falling Apart
By Matthew L. Brown
People should be glad it's not any easier to do business in Massachusetts, according to John Merrill, market president of Sovereign Bank . That and other pieces of wisdom were shared with about 150 businesspeople who attended the Worcester Business Journal's Economic Outlook 2008 event Wednesday evening.
Merrill said a brief recession was imminent. He said Massachusetts is in better shape than many other states because "it's easy to do business" in the state, "but not too easy." He also said the state has been helped by the diversity of its economy and low unemployment.
The event was organized by the WBJ and the Worcester Regional Chamber of Commerce and sponsored by Sovereign.
Merrill was joined by Timothy Warren, president of the Boston-based Warren Group and Alan Clayton-Matthews, professor of economics at the University of Massachusetts Boston . The three agreed that, as Matthews said, "Massachusetts is not in a recession yet, but we are weakening fast."
Clayton-Matthews said the state's housing market is falling apart, but not to the extent it is in other regions. "Luckily for Massachusetts, residential construction is a much smaller part of the economy than it is in other parts of the country," he said.
Still, the crumbling housing market and the sharply rising cost of home heating oil and other goods has diminished household wealth, consumer confidence and the availability of credit, Clayton-Matthews said. The state's economy is growing more quickly than the U.S. economy, but its rate of growth is decelerating. Clayton-Matthews said projections indicate 2 percent growth in Massachusetts through July and employment growth near zero.
Warren, who along with Merrill predicted "smooth sailing" for the Massachusetts economy at last year's Economic Outlook event, said it's no wonder the economy is in trouble.
Home sales have plummeted for the last three years. In Worcester county, home sales are down 40 percent over that period. Prices have also fallen dramatically with prices in some of the state's most desirable towns down nearly 20 percent.
The easy money is gone, Warren said. Combine that with the nationwide foreclosure epidemic and waning consumer confidence and it's a recipe for recession, he said. Foreclosures "show no sign of abating," he said, even as about 80 percent of foreclosed homes are purchased by banks and lenders.
"Buyers are scarce when uncertainty looms," Warren said.
Merrill said a brief recession was imminent. He said Massachusetts is in better shape than many other states because "it's easy to do business" in the state, "but not too easy." He also said the state has been helped by the diversity of its economy and low unemployment.
The event was organized by the WBJ and the Worcester Regional Chamber of Commerce and sponsored by Sovereign.
Merrill was joined by Timothy Warren, president of the Boston-based Warren Group and Alan Clayton-Matthews, professor of economics at the University of Massachusetts Boston . The three agreed that, as Matthews said, "Massachusetts is not in a recession yet, but we are weakening fast."
Clayton-Matthews said the state's housing market is falling apart, but not to the extent it is in other regions. "Luckily for Massachusetts, residential construction is a much smaller part of the economy than it is in other parts of the country," he said.
Still, the crumbling housing market and the sharply rising cost of home heating oil and other goods has diminished household wealth, consumer confidence and the availability of credit, Clayton-Matthews said. The state's economy is growing more quickly than the U.S. economy, but its rate of growth is decelerating. Clayton-Matthews said projections indicate 2 percent growth in Massachusetts through July and employment growth near zero.
Warren, who along with Merrill predicted "smooth sailing" for the Massachusetts economy at last year's Economic Outlook event, said it's no wonder the economy is in trouble.
Home sales have plummeted for the last three years. In Worcester county, home sales are down 40 percent over that period. Prices have also fallen dramatically with prices in some of the state's most desirable towns down nearly 20 percent.
The easy money is gone, Warren said. Combine that with the nationwide foreclosure epidemic and waning consumer confidence and it's a recipe for recession, he said. Foreclosures "show no sign of abating," he said, even as about 80 percent of foreclosed homes are purchased by banks and lenders.
"Buyers are scarce when uncertainty looms," Warren said.
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