Report: Mass. economy rebounds in 2nd quarter
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The state’s economy contracted slightly in the first quarter of this year before bouncing back with a 4.9-percent annual growth rate in the second quarter, according to MassBenchmarks, a journal of the state’s economy.
The MassBenchmarks report cited a “surprisingly weak” economic performance across both Massachusetts and the nation. It said the state’s economic output, or gross domestic product (GDP), fell back at a 0.3-percent annual rate in the first quarter while the U.S. economy declined 2.1 percent.
"The steep downward revision in the estimate of Massachusetts economic growth for the first quarter (originally reported as plus 2.6 percent) is primarily due to the correspondingly large downward revision in U.S. economic growth in the first quarter (originally reported as plus 0.1 percent)," noted Alan Clayton-Matthews, a senior contributing editor at MassBenchmarks and associate professor of economics and public policy at Northeastern University, who compiles and analyzes the growth data.
In a statement, Clayton-Matthews said the downward revisions in U.S. GDP reflect large reductions in two area — consumer spending and exports — that were most affected by unusually harsh winter weather. “This sharply lowered estimates of national and state productivity growth, meaning fewer business sales per employee and thus a significant reduction in the first quarter estimates of economic growth," Clayton-Matthews added.
But in the second quarter, which ended June 30, the numbers began to turn upward. MassBenchmarks reported that:
- Payroll employment in the Bay State grew at a 1.7 percent annual rate in the second quarter, up from 1.2 percent in the first quarter, while U.S. payroll employment grew at a 2.2 percent annual rate, up from 1.5 percent in the first quarter.
- The unemployment rate in Massachusetts fell from 6.3 percent in March to 5.5 percent in June, while the U.S. unemployment rate fell from 6.7 percent to 6.1 percent.
- Consumer spending in Massachusetts continued to grow strongly in the second quarter. Spending on items subject to the state's regular sales and motor vehicles sales taxes — a good indicator of consumer discretionary spending — grew at an annual rate of 7.4 percent in the second quarter, up from 6.1 percent in the first quarter.
Looking ahead, the MassBenchmarks Leading Economic Index, which forecasts growth at an annual rate over the next six months, was 3.8 percent in June, and the three-month average from April through June was 4 percent.
MassBenchmarks is published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.
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