Economy
Massachusetts economic growth blows away national economy in first quarter
Colin A. Young/SHNS
The Massachusetts economy grew at a much faster pace than the national economy in the first quarter and the economic analysts at MassBenchmarks see that trend continuing over the coming months. Real gross domestic product in Massachusetts increased at an 11.3 percent annualized growth rate in the first quarter, compared to the 6.4 percent growth rate in the nation’s economy, the local economists reported Thursday.
Alan Clayton-Matthews, a Northeastern University economics professor and MassBenchmarks senior contributing editor, said Massachusetts “has had more potential for a stronger rebound than the nation” because the economic shutdown in the Bay State was broader than elsewhere and led to greater job losses.
“Economic growth in both the state and the nation in the first quarter exceeded expectations of most economists at the beginning of this year due to the size of the federal coronavirus relief package that was delivered in March — which had an immediate effect on household income and consumer expectations — and due to the faster than expected distribution of COVID-19 vaccinations,” he wrote. “Both factors spurred a sooner start to opening the economy than seemed likely at the height of the last wave after the fall and winter holiday seasons.”
Massachusetts payroll employment grew at a 6.8 percent annual clip during the first quarter, more than three times as fast as the 2.1 percent national rate, MassBenchmarks said. Despite that relatively strong growth, employment in Massachusetts remained 8.3 percent below the first quarter of 2020 while the national jobs deficit was 5.6 percent on a year-over-year basis. Consumer spending growth was also robust in the first quarter — compared to the first quarter of 2020, spending on items subject to the regular sales and motor vehicle sales taxes was up 13.1 percent.
MassBenchmarks categorized wage and salary growth in Massachusetts in the first quarter as “very strong.” Looking ahead to the in-progress second quarter and the third quarter, MassBenchmarks said it expects growth in Massachusetts will “remain strong through the spring and summer months.”
The group estimated Massachusetts real gross domestic product will rise at a 7.5 percent annual rate in the second quarter and an 8.5 percent rate in the third quarter. Those rosy outlooks could be held back, MassBenchmarks said, by delays or disruptions in vaccination efforts, the emergence of vaccine-resistant COVID-19 variants and bottlenecks caused by supply chain disruptions or labor shortages here and abroad.
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MortisMaximus
April 30, 2021 at 12:07 pm
The two reasons for the larger economic growth in Massachusetts are forced increases in wages and higher tax rates across the board. Look at the cost of real estate in Mass., prices here rival anyplace in the world when adjusting for income rates. The current economic environment is not sustainable. Soon returns on investments where capital gains finance debt will collapse partly because of higher tax rates and partly because of jobs and businesses fleeing to lower cost localities. Passing along higher costs to consumers sounds easy enough, but gouging your way out of economic catastrophe will never work because the scale of economic activity is skewed so greatly.