Economic Forecast: Steady But Slow Growth
Massachusetts Labor Market “Continues to Look Strong”
The Massachusetts economy “seems fairly healthy on balance” one quarter into 2024 but gross state product and job growth have both slowed recently, the economists at MassBenchmarks said Monday.
Massachusetts real gross state product (GDP) increased at an annualized rate of 1.8 percent over the first three months of 2024, the publication of the University of Massachusetts Amherst Donahue Institute in cooperation with the Federal Reserve Bank of Boston said, while the U.S. Bureau of Economic Analysis measured U.S. GDP growth at 1.6 percent over the same time. Both represented slowdowns from 2023 fourth quarter growth rates of 3 percent and 3.4 percent, respectively.
Annual revisions to payroll employment data “indicate a much slower pace of job growth in the Commonwealth as compared to the nation during 2023,” MassBenchmarks said. The U.S. Bureau of Labor Statistics revised Massachusetts job growth down from 1.9 percent to 0.7 percent for the December 2022 to December 2023 period. That’s less than half the 2 percent rate of national job growth during the same year, and means that the BEA estimate of Massachusetts GDP growth over that time is now 1.9 percent versus 3.1 percent for the country as a whole.
“Although the state and the nation grew at about the same pace in the first quarter of 2024, the growth figures for that quarter reflect a slowdown for the U.S. and a continuation of relatively moderate growth in Massachusetts,” the group of economists said in a report written by senior contributing editor Alan Clayton-Matthews. “Nevertheless, the indicators for the first quarter show that the state’s economy seems fairly healthy on balance.”
The Massachusetts labor market “continues to look strong,” with an unemployment rate of 2.9 percent in March compared to 3.8 percent nationally. But MassBenchmarks pointed out that one indicator it watches “suggests some potential softening.”
The U-6 unemployment rate counts more people as unemployed than the standard rate by including people who only have part-time work but want full-time work, and those who want to work but have given up looking for a job. Thanks to an “increase in this latter group,” MassBenchmarks said, Massachusetts’ U-6 rate climbed to 8 percent in March from 6.8 percent in December and 6.2 percent in March 2023.
Clayton-Matthews and the rest of the MassBenchmarks board said their outlook suggests “continued steady but slow growth” for Massachusetts across the second (3.1 percent) and third (0.5 percent) quarters of the year.
