US economy grew at 2.9 percent rate in third quarter

bGlobeBy Deirdre Fernandes | The Boston Globe

The Massachusetts economy expanded at an accelerated pace in the third quarter of 2016, faster than the national economy, which had its biggest gains in two years, the University of Massachusetts reported on Friday.

The state’s economy grew at 3.7 percent in the three months ending in September, compared to 2.9 percent nationally. The state’s workers saw large gains in jobs and wages, according to the report, published in the UMass economic journal, MassBenchmarks.

Employee wages climbed 6.5 percent in the third quarter of 2016, compared to the same time last year.

At 3.6 percent, Massachusetts was tied in September for the eighth-lowest unemployment rate in the country. The state’s reliance on education, health care, and technology buffered it through much of the recession and has helped the economy expand more quickly than the nation.

And in an indication that even in Massachusetts the recovery is taking hold and reaching more people, the number of discouraged workers and those who are working part-time who want full-time work declined to 8.2 percent in September from 9.7 percent during the same period in 2015. That’s the lowest level since March 2008, although still above the 2007 rate of 7.1 percent, according to MassBenchmarks.

The UMass report, however, found some worrying signs beneath the overall healthy economic growth.

Spending by consumers and businesses in Massachusetts slid by 0.6 percent in the most recent quarter after growing at a rate of 5.5 percent between April and June. Fewer state residents bought new cars and businesses cut back spending for equipment and supplies, likely contributing to the slowdown, which it is hurting state tax revenue collections, according to the report.

More shoppers are likely shopping online, instead of at brick-and-mortar stores, spending which may not always result in sales taxes being collected.

Alan Clayton-Matthews, an economics professor at Northeastern University who analyzes the data for MassBenchmarks, said he expects the state to grow at a much more moderate pace in the next six months.

“With fewer unemployed workers and with more baby boomers retiring, it is becoming more difficult for employers to find the workers they need,” Clayton-Matthews said. “It is unlikely that the pace of employment and earnings growth in Massachusetts can continue at the current pace given weak global economic performance and demographic constraints.”

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