The Outlook For MetroWest
The New England Economic Project is forecasting a decline in Massachusetts employment of -3.4 percent in 2009, less than the -3.7 percent projected for the United States.
However, in 2010 NEEP forecasts an additional 2 percent loss in jobs in Massachusetts, twice the 1 percent loss anticipated for the United States. Thus, while the recession here in Massachusetts began later than after the national contraction, employment will rise more slowly during the economic recovery.
Regional View
The MetroWest Economic Research Center tracks employment in several sub-state regions of the commonwealth. These regions differ from the state and each other in their business cycles and industrial structure.
As a result, MERC expects the intensity and length of this recession will differ among the regions. For example, the MetroWest region (including the towns of Ashland, Framingham, Holliston, Hopkinton, Natick, Sherborn, Southborough, Sudbury, and Wayland) recovered well from the 2001-03 recession, outperforming the state, while the greater Marlborough region recovered more slowly.
Firms in professional and business services and trade, transportation and utilities are the largest employers in both regions. NEEP, which projects employment trends for all of Massachusetts, predicts statewide gains in 2010 in the professional and business services, but continued losses in trade, transportation and utilities.
Unemployment in Massachusetts is projected to peak at 9.5 percent in 2010. For a historical comparison, the state’s unemployment rate peaked at 5.9 percent in the last recession of 2001-2003.
The rate is predicted to decrease to 8.7 percent in 2011 and 7 percent in 2012. Based on these predictions, it is expected that the unemployment rate could take a considerable time to recover to its pre-recession rate.
Such an outcome will be especially likely if the recovery process falls under the jobless recovery process, a process in which the economy is recovering, but unemployment is still high and only decreases relatively slow.
Sub-state regions in Massachusetts are expected to follow this trend as well. However, it is important to note that most sub-state regions, such as MetroWest and the Greater Marlborough region, will be expected to post lower unemployment rates than the state as a whole.
The Housing Market
There is a consensus from two national forecasters that the worst is over in the housing market in many regions, including the Northeast.
The federal stimulus program has helped to boost housing sales across the country, including here in Massachusetts. While median prices are still falling in many cities and towns, in other local areas, prices are already on the rise. Sales have been strong for several months in a row in many local communities.
Since the tax credit program has been extended to home buyers, and since there’s a big inventory of homes available for sale, and since the mortgage rates are still low, the market should be active in the first half of 2010.
Both sales volume and prices should rise. The benefit to the shake-out in the housing market is that housing is more affordable now than in recent years.
In addition, recent declines in the prices of some goods and services may contribute to reducing the high cost of living in MetroWest and other nearby areas.
The authors are all on staff at the MetroWest Economic Research Center, which is housed at Framingham State College.
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