Bay State economy slows in second quarter

Published on Monday, August 04, 2008

Real Massachusetts gross domestic product is estimated to have grown at an annual rate of 1.6 percent in the second quarter, following a recently revised 2.2 percent rate of growth in the first quarter, according to the MassBenchmarks Current Economic Index. The Bureau of Economic Analysis reported today that the national economy grew at an estimated annual rate of 1.9 percent in the second quarter, which is up from 0.9 percent in the first quarter.

The state’s economy is expected to slow further during the remainder of the year. If the economy grows at an annual rate of 1.2 percent over the next six months, as predicted by the MassBenchmarks Leading Economic Index, then annualized growth in real Massachusetts gross domestic product will be 1.3 percent in the third quarter, and 1.2 percent in the fourth quarter. The leading index is a forecast of the growth in the current index over the next six months, expressed at an annual rate.

The state’s technology, science, knowledge, and health sectors are still expanding, while housing and consumer-related sectors, such as construction, and retail trade continue to contract. Overall, the state’s labor market is weakening. Growth in payroll employment slowed to an annual rate of 0.3 percent in the first quarter, even as the U.S., as a whole, shed jobs at a 0.6 percent annualized rate during that same period. The state’s unemployment rate rose to 5.2 percent in June, while the national unemployment rate stood at 5.5 percent.

For a full breakdown of the latest indexes, click here. A comprehensive analysis of the state of the Massachusetts economy can be found in the most recent issue of MassBenchmarks.

MassBenchmarks is published quarterly by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The Donahue Institute is the public service, outreach, and economic development unit of the University of Massachusetts Office of the President. The current and leading economic indexes are compiled and analyzed by Dr. Clayton-Matthews and released monthly by the UMass Donahue Institute.