While Massachusetts may not recover all of the jobs it lost until 2022, 2023, or beyond, the economic recovery here is “well underway,” aided by federal stimulus spending and COVID-19 vaccinations, and the outlook for the rest of 2021 is “quite positive,” according to area economists.
Still, Massachusetts has recovered only slightly more than half of the jobs lost during the pandemic-fueled downturn and faces “labor market scarring” especially among women and people of color, according to a new edition of MassBenchmarks that summarizes economists’ most recent thoughts on the situation.
During a discussion this month, “recovering for whom” was a particular focus for MassBenchmarks Board members.
“The economic downturn associated with COVID-19 was deeply unequal, with low wage workers in service industries bearing the brunt of the downturn,” a summary of the discussion, released on Wednesday, said. “A significant portion of these workers are people of color and young adults. There was, of course, a robust public policy response to help with household income and housing stability. That said, as these supports sunset, there will continue to be significant concerns about economic vulnerability and labor market scarring for this segment of the population.”
Economists also remain concerned about impacts on women, who make up a disproportionate share of unemployment benefit claims and are showing decreased labor force participation rates. “At its core, the economic downturn exacerbated existing inequalities, and public policy will need to be geared towards helping community stability and job training to reduce long term economic and labor market scarring in the future,” the summary said.
Other concerns flagged by economists: a slight decline in the Massachusetts population during the year ending on July 1, 2020; the potential for any long-term decline in labor force participation rates, and the impacts of the remote work trend on commercial real estate.
Economists also cited a string of positive developments, including tax collections are are coming in at a better than expected clip.
“Wage and salary income and consumer spending are almost back to trend. Personal income levels are actually above trend and reflect large federal government stimulus,” the summary said. “This has contributed to large increases in spending on nondurable and, particularly, durable goods. On the other hand, spending on services has lagged, awaiting a fuller reopening of the economy. Leisure and hospitality employment is growing the fastest currently, but was decimated by the economic shutdown and still has a long way to go to recover to pre-pandemic levels. Professional, scientific, and technical services and finance continue to fare well in the state, with especially robust employment growth in consulting and research and development.”
As previously reported, real gross domestic product in Massachusetts increased at a 4.7 percent annualized rate in the fourth quarter of 2020 and at an 11.3 percent annualized rate during the first quarter of 2021, outpacing the annualized U.S. rates of 4.3 percent and 6.4 percent over the same periods. At 6.5 percent, the Massachusetts unemployment rate is down almost 10 percentage points from its peak of 16.4 percent in April 2020.
