Massachusetts Economy Continues to Outperform the Nation
Economic growth in Massachusetts was moderate in the second quarter but outpaced the growth rate of the U.S. economy, while inflation in the Boston metropolitan area ran “meaningfully hotter” than the nation, according to a new report.
State GDP Growth Exceeds U.S. Rate
The Aug. 3 snapshot from MassBenchmarks, which is published by the University of Massachusetts Amherst Donahue Institute with contributions from other public and private research institutions, found real gross state product in Massachusetts increased at an annual rate of 2% in the second quarter, down from 2.4% in the first quarter.
U.S. GDP rose at an annual rate of 1.5% in the second quarter after growing at a 2.1% clip in the first quarter.
“Growth held its moderate pace through the first half of the year despite persistent geopolitical and market uncertainty, including the on-and-off war with Iran, swings in oil prices, and questions about the sustainability of the AI investment cycle,” the publishers of the economic journal said. “The Massachusetts and U.S. economies are now expanding moderately, with the state’s small growth advantage roughly matching its productivity differential.”
Employment Growth Continues Despite Shrinking Labor Force
Payroll employment expanded at a 1.1% annual rate in Massachusetts and 0.9% in the U.S. in the second quarter, following 0.3% employment growth in both economies in the first quarter.
“The state’s labor force has continued to shrink, but productivity gains — running about half a percentage point above the corresponding U.S. measure — continue to keep Massachusetts growth slightly ahead of the nation’s,” Alan Clayton-Matthews, senior contributing editor, said in a statement. “Relatively slow job growth reflects the demographics of an aging workforce, years of falling fertility rates, and immigration policies that sharply reduced net international migration.”
Boston Inflation Runs Well Above National Average
The Consumer Price Index rose at a 13.1% annual rate in Boston on a seasonally adjusted basis. Core inflation, a metric that excludes food and energy, was 7.9% in Boston and 2.9% in the U.S.
Looking ahead, MassBenchmarks projects Massachusetts GDP growth of 2.3% in the third quarter and 2.5% in the fourth.
