Alan Clayton-Matthews predicts weak second quarter in Mass. due to federal policies

Economists: Fed budget policies hurt Mass.

By Jordan Graham | Boston Herald | June 28, 2013

The state economy, despite performing well compared to the rest of the country, has begun to stall due to federal tax and budget policies, a group of local economists said yesterday.

The MassBenchmarks Editorial Board, made up of economists from around the state, said in a statement released yesterday that the state’s economic growth has slowed and if the federal policies put in place in January remain, that slow growth is expected to continue.

Citing federal policies such as tax increases and sequestration, the board said the problems are not reflected in some often-cited economic indicators, such as the unemployment rate.

Those numbers are not especially impressive, however.

According to the Bureau of Labor Statistics, state unemployment figures remain a full percent below the nation as a whole, but that gap was 1.5 percent at the beginning of 2012, suggesting that jobs are not being added at the same rate in Massachusetts as the rest of the country.

The state economy is “being undermined by federal tax and budget policies,” the board said.

“We’ve had essentially no employment growth since January,” said Alan Clayton-Matthews, a member of the board and an economist at Northeastern University. Clayton-Matthews said employers are not cutting jobs, but they aren’t hiring at a high rate either, leading to the slow growth.

Underemployment — people who work part-time but want a full-time job — has risen every month this year, the board said.

“Everything’s pointing to a very weak second quarter,” Clayton-Matthews said.

Still, the board did see some positives. The housing market continues to be the most prominent sign of a recovery, and households are willing to spend.


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