The 2013 outlook: Slow hiring, then it picks up
By Megan Woolhouse | The Boston Globe | January 13, 2013
The Massachusetts economy grew slowly last year, but economists predict it will gain steam throughout 2013, adding jobs at a moderate pace.
The fastest job growth will occur in construction, as housing and commercial real estate markets rebound, as well as in two technology related sectors, professional and business services and information services, and leisure and hospitality, according to forecasts.
The economy will “slowly accelerate, and by the end of the year we should have stronger growth,” said Northeastern University economist Alan Clayton-Matthews. He added, “The worst may be now.”
A slow pace of hiring marked the final months of 2012 for Massachusetts as concerns about how Congress would manage the combination of tax increases and budget cuts known as the fiscal cliff led both consumers and businesses to hold back on spending. The continued economic struggles in Europe, the state’s largest export market, also had a significant impact, slowing demand for Massachusetts technology, pharmaceutical, and other products made here.
Total Massachusetts exports fell 15 percent in the past three months, even as US exports increased by 2 percent, largely because of the recession in Europe, said Patrick Armstrong, an economist at Moody’s Analytics, a forecasting firm in West Chester, Pa. Europe accounts for 40 percent of Massachusetts’ exports, about double the US average.
Armstrong said a downturn in Germany, which accounts for one-third of the state’s exports to Europe, has contributed to the slowdown here.
Economists expect a slow pace of hiring in the first few months of 2013 because of more uncertainty in Washington as Congress tries to tackle spending cuts to bring the budget under control and faces another crucial vote to raise the nation’s borrowing limit. In addition, federal payroll tax increases that were allowed to go into effect as part of the recent fiscal cliff deal could slow consumer spending.
Economists project, however, that growth here will accelerate later in the year — and describe growth in 2014 as robust — as political issues are resolved, housing markets recover, and national and global economies improve.
The Massachusetts unemployment rate had fallen to 6.6 percent in November, from a peak of 8.7 percent in December 2009. That remains much lower than the national average of 7.8 percent.
Armstrong predicted that Massachusetts’ unemployment rate will rise to 6.8 percent in the first three months of 2013, before declining to 6.4 percent at the end of this year and 6.2 percent by the end of 2014.
“Boston’s recovery next year will be driven in large part by the rebound in residential construction,” Armstrong said. “The Seaport District has been the source of much of this growth, with major projects such as Waterside Place and the Boston Wharf Tower having broken ground recently.”
Clayton-Matthews predicted that the state’s unemployment rate would remain between 6 and 6.5 percent in 2013 and 2014, and then decline slowly to 5.5 percent by the end of 2016.
Clayton-Matthews said the unemployment rate may rise temporarily in 2013 as discouraged workers, who are not counted in the unemployment rate, resume job searches in an improving labor market.
So far, the state has regained about 87 percent of the 143,000 jobs lost in the recession. By the end of 2013, the state should regain all the jobs it lost in the downturn that began here in 2008, according to Clayton-Matthews’ forecast.
Susan Fontana, a spokeswoman for the national staffing agency Manpower Inc., said employers in Greater Boston will be “looking to hire at a solid pace.” According to a recent Manpower survey of local employers, 18 percent of employers said they planned to increase staff in the first three months of the year and 72 percent said they would maintain staffing levels.
Manpower said manufacturers, retailers, the financial sector, and the education and health services sector would probably add jobs. “I would say optimism is increasing,” Fontana said.
At Hollister Inc., a Boston staffing firm, hiring increased significantly last year in the technology and health care sectors, said spokeswoman Trish Bromme.
She said she expected that trend to continue, noting that employers in those sectors are hiring for a variety of positions. Lately, for example, high-tech and health care companies appear to be hiring more sales and marketing employees.
“We’re coming out of the gate this year very strong,” she said.
How will the fiscal cliff compromise bill affect you?
By Shira Schoenberg | MassLive.com | January 3, 2013
With all the discussion about the compromise bill that President Barack Obama signed into law averting the so-called “fiscal cliff,” how will the bill impact you? Here are a few scenarios.
The Unemployed
In November, the state Division of Unemployment Assistance notified 45,000 Massachusetts residents who were receiving federal extension benefits that their benefits will end Dec. 29. Those benefits were an additional 28 weeks of unemployment compensation approved by Congress as a way to help those struggling in the recession. The federal benefits were added to the 26 weeks of benefits provided by the state.
The compromise bill extended the federal unemployment benefits extension for another year. Alison Harris, director of communications at the Executive Office of Labor and Workforce Development, said Wednesday that the state is still working to understand the details of the bill – including who will be eligible and for how many weeks people can receive extended benefits. In previous benefits extensions, after the bill was passed, the U.S. Department of Labor would analyze it and give instructions to the states. Harris said anyone receiving unemployment benefits should continue to file for benefits as they would on any other week, as the state works out the details.
Individuals with income above $400,000 and couples with income above $450,000
This is the group that will be hit by the biggest tax hike. For these taxpayers, the tax rate will rise from 35 percent to 39.6 percent. The capital gains tax rate will also rise on these taxpayers from 15 percent to 20 percent. The Affordable Care Act adds another 3.8 percent surcharge on investment income for singles earning more than $200,000 and couples earning more than $250,000. So for the highest earners, capital gains will actually be taxed at a rate of 23.8 percent.
Ben Forman, research director for the think tank MassINC, estimated that less than 1 percent of households in Massachusetts earn more than $450,000 a year.
Even so, Alan Clayton-Matthews, associate professor and director of quantitative methods at Northeastern University’s School of Public Policy and Urban Affairs, said a higher percentage of households in Massachusetts will be impacted by the tax increases on high-income individuals, compared to households around the country, because Massachusetts is a wealthy state. “We have a number of households with two earners which combined would put them over the threshold, and combined many households would have income that high from investments,” Clayton-Matthews said.
Individuals with income above $250,000 and couples with income above $300,000
These individuals will also pay higher taxes because of new limits on deductions and exemptions. According to Roberton Williams, a senior fellow at the non-partisan Tax Policy Center, taxpayers above that threshold who itemize deductions – including deductions for charitable contributions, mortgage interest, or anything else – will see their deductions reduced by 3 percent of the amount by which their adjusted gross income exceeds the threshold. For example, a couple earning $400,000 – $100,000 above the threshold – would see their itemized deductions reduced by $3,000. (A taxpayer is guaranteed to keep at least 20 percent of their itemized deductions.)
The personal exemption – which last year was a $3,800 deduction for each individual in a household – will also be reduced for those taxpayers, but on a different scale. Above the $300,000 threshold, a couple will lose 2 percent of their personal exemption for every additional $2,500 they earn – so a couple earning above $422,500 will lose their entire personal exemption, Williams said. The phasing out of personal exemptions for high income earners was part of the law until 2001, but was eliminated gradually by President George W. Bush’s tax cuts.
The U.S. Census does not provide data specifically about income above $300,000. But according to the Census Bureau’s 2011 American Community Survey, 7.2 percent of Massachusetts households earned more than $200,000 a year, compared to 4.3 percent nationally.
Individuals with incomes below $250,000
For these taxpayers, the tax cuts implemented under Bush will be continued permanently. Rates will not rise and deductions will not be impacted. The deal also extends for five years Obama’s expansions of the child tax credit and earned income tax credit, as well as Obama’s new American opportunity tax credit, a tax credit for higher education costs for low-income families.
However, all taxpayers will be affected by the expiration of a 2 percentage point break in the Social Security payroll tax, which was put in place for 2011 and 2012. The rate will go from 4.2 percent to 6.2 percent for all taxpayers.
The Social Security payroll tax break is worth around $1,000 for a worker earning $50,000 a year.
The Associated Press, citing the Tax Policy Center, provided a chart estimating the total tax increase on households earning different amounts, ranging from an average tax increase of $297 for those earning $20,000 to $30,000 annually to an average tax increase of $170,341 for those earning over $1 million.
Businesses
MassLive.com reported Wednesday on the impact to businesses of the fiscal cliff deal. Business tax breaks on research and development and on equipment write-offs were continued – though possibly too late to make a difference in 2012 spending. Tax credits for renewable energy production were also continued.
One of the biggest potential impacts on Massachusetts – the spending cuts – remains uncertain. The compromise bill postponed “sequestration,” scheduled cuts split between defense and domestic spending, for two months. But it left open the possibility of cuts in the future.
Forman said Massachusetts has a large number of defense and medical research companies, both areas that could be impacted by the proposed cuts. “The key question for us is what will happen with the defense budget…and domestic spending on research,” Forman said. “Those are the things on the chopping block and we still don’t know. We kicked the can down the road two months on those things, and uncertainly is never good for the industry.”
Brighter outlook for Mass. businesses in 2013
US and global economies are predicted to rebound if the fiscal crisis can be resolved swiftly, and Massachusetts is well positioned to build on its strengths
By Globe Staff | The Boston Globe | December 30, 2012
The Massachusetts economy, despite slowing in recent months, should improve in 2013, adding jobs at a moderate pace and gaining speed towards the end of the year, according to economic forecasts.
But the forecasts hinge on an important factor: the fiscal cliff. If drastic federal tax increases and spending cuts go into effect next month as scheduled, they could tip the state and national economies into a double-dip recession, according to Northeastern University economics professor Alan Clayton-Matthews. Massachusetts stands to lose more than 50,000 jobs in the next few years unless a political compromise is reached soon.
Clayton-Matthews said he expects Congress and the White House will reach a compromise before the worst can happen. And once they do, he said, it should provide a lift for Massachusetts, freeing employers from uncertainty about taxes and the government’s next move.
“It looks like by the end of the year the economy will be accelerating robustly,” Clayton-Matthews said. “This weak period now, with all this uncertainty from the fiscal cliff and the slowdown in Europe, will improve throughout the year.”
Massachusetts recovered from the recession faster than the nation as a whole largely due to its high-tech industry and strong global demand for technology products. But the state economy slowed in recent months as national and global economies sputtered, weakening demand for Massachusetts products in key export markets such as Europe and China.
Both US and global economies, however, are poised to rebound, according to IHS Global Insight, a Lexington forecasting firm. Economists there say the dynamics for a gradually accelerating US recovery are already in place, assuming tax and spending issues get resolved. Global growth should also accelerate gradually next year.
“Over the past year, the risks facing the global economy were skewed to the downside,” said Nariman Behravesh, IHS Global Insight’s chief economist. “In the coming year, not only will some of the big-four threats — another US recession, a Eurozone meltdown, a Chinese hard landing, and a war in the Persian Gulf — become less menacing.”
In Massachusetts, employment is expected to grow by just under 1 percent, or about 30,000 jobs, in 2013, compared to 1.2 percent this year, Clayton-Matthews said. By 2014 and 2015, employment growth will increase by 2 percent, or more than 60,000 jobs, each year.
So far the state has regained 87 percent of the 143,000 jobs lost in the recession. By the end of 2013, the state should regain all the jobs it lost in the downturn that began here in 2008, according to Clayton-Matthews’s forecast.
The unemployment rate, 6.6 percent in November, is expected to decline slightly next year. In 2013, jobs in Massachusetts will grow fastest in the construction, professional and business services, information services, and the leisure and hospitality sectors, according to forecasts. - MEGAN WOOLHOUSE
Retail: a more level playing field
Massachusetts retailers are looking forward to a more even field in 2013 by getting online merchants to collect taxes on all purchases.
The effort to adopt a national Internet sales tax law appears to be gaining momentum as the world’s largest online store, Amazon.com Inc., has expressed support for it while major retailers, such as Walmart Stores Inc., push legislation to eliminate what they see as an unfair advantage for online-only competitors.
Online retailers have been protected by a 1992 Supreme Court ruling that requires them to collect taxes only in states where they have a store or other outpost. This loophole cost Massachusetts $387 million in taxes in 2011 and nearly 2,000 jobs, according to a recent study by the Massachusetts Main Street Fairness Coalition, a group of retailers, elected officials, and labor unions.
The coalition and the Patrick administration plan to lobby the federal government to adopt a national law that would require all online merchants to collect and remit sales taxes.
But even if these efforts fail, the Patrick administration recently succeeded in getting Amazon to collect the state’s 6.25 percent sales tax from Massachusetts customers beginning in November. - JENN ABELSON
Commercial real estate: livelier times
The commercial real estate market will get a lot livelier in 2013 with office rents and property values on the rise.
That combination should entice owners of large office properties to sell and developers to seek more opportunities to launch new projects. Speculative building, or erecting projects before tenants commit, appears unlikely as lenders stay conservative following the economic downturn. But neighborhoods like East Cambridge and Boston’s Seaport District will continue to see construction for growing technology and life sciences firms.
In the multifamily residential market, apartments will remain the favored product. New apartment towers are already rising across Boston, with the first wave to be completed in 2013.
Several large condominium projects are also likely to get underway, including the long-stalled Filene’s redevelopment in downtown Boston. The condominium market should heat up around the city, as more buyers hunt for a dwindling supply of units.
It is another matter whether any of these new homes will be affordable for middle-income families or younger renters. The median sale price for a condo in downtown Boston rose to a near record of $486,000 at the end of 2012, according to the real estate information service LINK. Rents are also among the highest in the nation.
Boston officials hope that the completion of the city’s first project of so-called micro-apartments — 350- to 400-square-foot units — will begin to address this issue. The apartments are smaller by design to make them more affordable, but it remains to be seen whether prices will be manageable or the units desirable. - CASEY ROSS
Travel and Tourism: attracting more international visitors
As the middle class expands in emerging nations such as China and India, the market for international visitors has increased dramatically. The Massachusetts tourism industry is ready to grab its share.
With an additional $4.5 million to focus on attracting international visitors, the Massachusetts Office of Travel and Tourism is collaborating with Brand USA, a federal agency that promotes the United States as a destination, and airing the state’s first TV ad in another country.
The Greater Boston Convention & Visitors Bureau is teaming with Brand USA to promote Boston at trade shows around the world in the hopes of doubling the number of international visitors to 2.8 million by 2015.
The Massachusetts Port Authority is focused on adding more nonstop flights into Logan International Airport from Asia, the Middle East, and Latin America. The first nonstop to Japan started in 2012; a Central American route will probably begin operating in the new year.
Hotels, shopping centers, and tour operators are also paying more attention to the international market. The Charles Hotel just became the first independent US hotel to launch a Chinese website hosted in Hong Kong. - KATIE JOHNSTON
Housing: moderate gains in Boston market
The Boston-area housing market will continue to improve in 2013 with sales increasing and home values stabilizing — especially in higher priced neighborhoods.
As a sign of increasing confidence, more sellers will put properties on the market while developers build new condominiums, apartments, and single-family homes.
But even with this additional supply, the overall inventory will remain low, holding back sales. Few expect a boom in prices, especially in areas that are farther away from Boston and its amenities.
Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at the Northeastern University School of Public Policy and Urban Affairs, said the condo market in and around Boston showed some strength this year as prices climbed.
He said he expected condo prices to rise modestly in 2013. Demand for single-family homes should also increase modestly next year, Bluestone said.
Home values in the Boston area have held up better than in other parts of the country, which were hit harder by the recent housing bust.
Values here are down about 15 percent since the 2005 market peak, about half the decline of the country as a whole, according to the S&P/Case-Shiller Home Price Indices, widely used gauge of the housing market.
Karl E. Case, a creator of the national housing indices and a retired Wellesley College economics professor, said the housing market faces several challenges, including changing demographics. The trend is upward, he said, but “it’s not likely to be a rocket ship.’’ - JENIFER B. MCKIM
Health care: change, consolidation, cost controls
For hospitals and health insurers, 2013 looks to be a year of change and consolidation. Industry pressures combined with new state and federal laws will push health care providers and payers toward more coordinated care with an eye towards reining in costs.
Hospitals and doctors, who are banding together in integrated networks known as accountable care organizations, are bracing for deeper cuts in Medicaid and Medicare, the government health insurance programs for lower-income and older Americans, even if US lawmakers manage to avoid the fiscal cliff and agree on spending reductions.
At the same time, insurers will intensify efforts to shift health care providers to so-called global payment contracts where hospitals and physicians are given a fixed budget to cover a patient’s care and are rewarded for providing quality care under budget.
That is replacing fee-for-service contracts that reimburse providers for visits, tests, and procedures.
Hospital consolidation will probably accelerate, as Partners HealthCare presses forward with a plan to acquire South Shore Hospital, Beth Israel Deaconess Medical Center negotiates affiliations with Cambridge Health Alliance and Signature Healthcare of Brockton, and Tufts Medical Center works with Vanguard Health Systems to buy independent hospitals.
Steward Health Care System, meanwhile, will renew its efforts to expand out of state. - ROBERT WEISMAN
Financial services: Plenty of uncertainty still ahead
It’s been a strong year for stocks, and with the election over and the economy slowly improving, there could be more good news for investors ahead.
But markets hate uncertainty, and there will still be plenty of it in 2013. Even if Congress and President Obama reach some agreement to avoid the fiscal cliff, there will more tax and spending issues to deal with in the new year. Early in 2013, Washington must contend with another big, divisive issue: whether to raise the nation’s debt ceiling and allow more borrowing. If that can’t be resolved quickly, it could put rating of the United States at risk and rattle global markets.
Banks and insurers are hoping the economy grows at a faster pace in 2013. The sluggish recovery has reduced demand for loans, insurance, and other financial products, while ultralow interest rates have reduced the money they earn on Treasury bonds and other safe investments. These factors have weighed on profits, prompting companies to cut jobs and streamlinetheir operations. More job cut announcements are likely.
The industry is also waiting for details of the Dodd-Frank financial overhaul to be determined and applied by regulators. Critics complain that the rules are being watered down, and worry that retiring US Representative Barney Frank, the Democrat from Newton, won’t be there to champion the reforms.
That may seem good for industry players, who complain that new regulations will be costly. On the other hand, a failure to achieve more transparency and better oversight could lead to new problems in the financial system. Everyone agrees that that is the last thing the sector, or the economy, needs. - BETH HEALY AND TODD WALLACK
Life sciences: Focus is on new drugs and devices
Fresh off their success in hosting well-attended national industry conventions in Boston, Massachusetts biotechnology and medical technology companies will turn their attention next year to bringing new drugs and devices to market.
After years of research and clinical trials, several biotechs are making the transition to full-scale commercial enterprises as they win Food and Drug Administration approval for new therapies. Vertex Pharmaceuticals Inc., Ironwood Pharmaceuticals Inc., and Ariad Pharmaceuticals Inc., will ramp up sales in 2013 after getting the green light from the FDA in 2012. Other drug makers, notably AVEO Pharmaceuticals Inc. of Cambridge, are hoping to join them next year.
At the same time, a growing number of global pharmaceutical companies are setting up operations in the Boston area to strike drug research partnerships with the region’s cluster of venture-backed biotechnology firms and university and hospital researchers.
Medical device companies, meanwhile, are looking forward to a faster review process from FDA regulators so they can get their products to market sooner. They will continue to fight a new federal tax to help pay for President Obama’s health care overhaul.
With new leadership, one of the state’s best known device makers, Boston Scientific, will focus on developing new products to help the company regain its competitive advantage and rebound from some disastrous decisions in recent years. - ROBERT WEISMAN
Clean energy: Financial, market challenges ahead
The last year was a tough one for the alternative energy sector, and 2013 could be just as challenging for many segments of this still-emerging industry.
High profile bankruptcies of government-backed companies such as battery maker A123 Systems of Waltham and energy storage firm Beacon Power of Tyngsborough have made investors reluctant to back young companies that might need years of capital infusions before becoming profitable. Cheap natural gas prices are making the new technologies less competitive. Government support is waning as Washington tries to bring ballooning budget deficits under control.
The wind energy sector, for example, is waiting for federal leaders to extend the production tax credit, which helps lower project costs and spurs development but expires at the end of the year. Each time it has been allowed to lapse in the past, wind projects have stalled.
The industry, however, encompasses a variety of energy technologies, and some are poised to advance in the next year. The solar and energy efficiency sectors expect another year of double-digit jobs and revenue growth, driven by mandates calling for the increased use of both technologies. In Massachusetts, clean technology companies are expected to benefit from aggressive state policies to bolster the industry.
But whether that will be enough to combat competition from overseas, especially China, is in question. China has wooed several clean technology manufacturing operations from Massachusetts in recent years, while Chinese firms have stepped up clean-tech investments in the United States. If the state and the nation hope to remain leaders in clean technology, companies here must figure out how to push their technologies forward with modest funding. - ERIN AILWORTH
Technology: another big year for state’s innovators
In technology, all signs point to another big year for Massachusetts. Some of the state’s hottest start-ups, such as the Cambridge software firm HubSpot Inc. and Boston’s network security company Rapid7 Inc., are poised to launch initial public stock offerings, which will pump more cash into the state’s innovation ecosystem.
But what could be even more promising is a growing interest among venture capitalists in funding tech start-ups that work in mobile technology, robotics, big data analytics, and enterprise software — all areas in which Massachusetts companies excel.
One of the most talked about tech trends is another Massachusetts specialty known as big data. This segment of the tech industry uses sophisticated software to analyze massive datasets collected from the Internet and other sources.
Big companies such as EMC Corp. of Hopkinton and tiny start-ups such as Sqrrl Data Inc. of Cambridge are banking on big data getting bigger. But as consumer data becomes more of a commodity, Congress will consider legislation in 2013 to increase privacy safeguards around the public’s online information.
Another piece of federal legislation that could affect the region’s innovation economy is the JOBS Act: The Jump-start Our Business Startups law, enacted earlier this year, allows start-ups to raise money from the public over the Internet.
The Securities and Exchange Commission must adopt rules to govern so-called crowd funding, but if it does, 2013 could be the year that dramatically changed how companies get started. - MICHAEL B. FARRELL
U.S. jobless rate climbs to 7.9 percent; 171,000 jobs added
By Frank Quaratiello and Ira Kantor | The Boston Herald | November 2, 2012
The U.S. unemployment rate rose to 7.9 percent in October as the nation added 171,000 jobs and the presidential candidates were quick to jump on the economic news.
The federal Bureau of Labor Statistics report also revised the number of jobs created in September to add another 34,000, increasing that figure to 148,000. The August jobs number was revised upward to show 192,000 jobs created.
Both President Obama and GOP nominee Mitt Romney found something to shout to the rooftops on the campaign trail today.
In Springfield, Ohio, the president touted the report: “This morning we learned that companies hired more workers in October than at any time in the last eight months. … Our businesses have created nearly five and a half million new jobs. …. The American auto industry is back on top. Home values and housing construction is on the rise. We’re less dependent on foreign oil than any time in 20 years. Because of the service and sacrifice of our brave men and women in uniform, the war in Iraq is over. The war in Afghanistan is ending; al-Qaeda’s been decimated. Osama bin Laden is dead.”
“We have made real progress,” Obama added. “But we are here today because we know we’ve got more work to do. As long as there’s a single American who wants a job and can’t find one, as long as there are families working harder but falling behind, as long as there’s a child anywhere in this country who is languishing in poverty and barred from opportunity, our fight goes on. We’ve got more work to do.”
But the Romney camp was quick to point out the slow rate of recovery.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill. The jobless rate is higher than it was when President Obama took office, and there are still 23 million Americans struggling for work,” said GOP presidential nominee Mitt Romney in a statement. “On Tuesday, America will make a choice between stagnation and prosperity. For four years, President Obama’s policies have crushed America’s middle class. For four years, President Obama has told us that things are getting better and that we’re making progress. For too many American families, those words ring hollow. We can do better. We can have real economic growth, create millions of good-paying jobs, and give middle-class families the security and opportunity they deserve. When I’m president, I’m going to make real changes that lead to a real recovery, so that the next four years are better than the last.”
The October employment report solidified the picture of the U.S. job market that’s emerged this year: Companies are hiring steadily, but cautiously. And unemployment remains high.
“It seems to me if the folks who are working for Gov. Romney were hoping the story this weekend would be the deteriorating U.S. economy and the declining jobs situation, then they’ve got to be disappointed this morning about that,” said Michael Goodman, public policy professor at the University of Massachusetts at Dartmouth. “I don’t think anybody looks at the employment situation in the United States and says, ‘we’re out of the woods,’ but certainly this data and the data over the last couple of years suggests we’ve been slowly and steadily moving in the right direction. … We’re adding jobs; people are returning to the work force. This is a stronger report than I expected. It’s very encouraging.”
Today’s report is the last broad snapshot of the economy before Tuesday’s presidential election. President Barack Obama still faces voters with the highest unemployment rate of any incumbent since Franklin Roosevelt.
In 1976, President Gerald Ford lost to Jimmy Carter when unemployment was 7.8 percent.
Northeastern University economist Alan Clayton-Matthews said the October jobs report, while not terrific, will allow the president to breathe a sigh of relief for now.
“I’m sure there’s that sense of relief and maybe even a bit more. Maybe they can say this shows the economy’s gaining momentum. It’s just not that much of a game-changer,” Clayton-Matthews said. “It’s good news. … It’s consistent with an economy that’s been slowly growing out of this recovery.”
Other economists weren’t so sure.
“(Obama) … has tried to spin it that things are getting better. Personally, I don’t see it at all. It’s a little better than consensus estimates, but it’s still under what we really need to the economy going again. The bottom line is job growth has not been strong. In the whole four years, we’ve had very little overall movement in the unemployment rate,” said Elliot Winer, chief economist for Northeast Economic Analysis Group.
According to David Tuerck, executive director of Suffolk University’s Beacon Hill Institute, the October jobs numbers show that on Election Day, the “Obama jobs gap” will be 4,470,000 — that’s the number of people who continue to be unemployed because of the failure of the economy to catch up to where it stood when President Obama took office in January 2009. When this number is added to the reported level of unemployment, the unemployment rate rises to 10.7 percent, Tuerck said.
But it’s unclear how much political effect any economic report will have. By this point, all but a few voters have made up their minds, particularly about the economy.
“People have given this a lot of thought,” said Andrew Kohut, president of the Pew Research Center. “One report … is unlikely to affect their view of whether Obama has done a good job with the economy or if Romney would do a better job.”
The number of Americans employed part time for economic reasons — often because they cannot find full-time work — fell by 269,000 to 8.3 million in October, according to the BLS report.
The recent drop in unemployment has heartened consumers, who are more confident and spending more. That’s providing much-needed support to the still-weak economy.
The Conference Board said yesterday that its index of consumer confidence surged to 72.2 in October, its highest level since February 2008, two months into the Great Recession.
The index is still below the level of 90 that’s consistent with a healthy economy. But it’s far above its all-time low of 25.3 in February 2009, in the midst of the financial crisis.
Americans are buying more big-ticket items, like cars and appliances. Auto companies reported steady sales gains last month despite losing three days of business to the storm in heavily populated areas of the Northeast.
Yet businesses remain nervous about the economy’s future course. Many are concerned that Congress will fail to reach a budget deal before January. If lawmakers can’t strike an agreement, sharp tax increases and spending cuts will take effect next year and possibly trigger another recession.
American companies are also nervous about the economic outlook overseas. Europe’s financial crisis has pushed much of that region into recession and cut into U.S. exports and corporate profits.
But steady consumer spending is supporting gains in U.S. factory production. The Institute for Supply Management, a private trade group, said manufacturing activity expanded for the second straight month in October.
New orders and production rose, the ISM’s survey found. The increase came mainly in consumer-oriented industries such as furniture, food and beverages, and computers. Demand for machinery, chemical products, steel and other metals fell.
In a rare dose of healthy news for the global economy, China’s manufacturing improved in October, two business surveys showed yesterday. The world’s second-largest economy may be recovering from its deepest slump since the 2008 global crisis.
Analysts expect China’s growth to strengthen this quarter. But they caution that the rebound will be too weak to drive a global recovery without improvement in the United States and Europe.
Herald wire services contributed to this report.
Regional economy still isn’t gathering steam
By Dan O’Brien | The Lowell Sun | October 28, 2012
John Mattheos, owner of Salon Mattheos, has been building his brand in Lowell for 20 years. He’s seen strong economic times and weak ones.
Earlier this year, Mattheos took advantage of a still-depressed real-estate market to scoop up a foreclosed property on Rogers Street, then invested tens of thousands of dollars to renovate it into a salon.
“I grew up in this neighborhood, Belvidere, so I figured I would do really well here,” Mattheos said in a recent interview. “It’s been OK. But I really thought I’d be able to get to that next level by now.”
More than three years after the last recession (supposedly) ended, many businesses are just not seeing the strong comeback they anticipated would happen.
Because it really hasn’t happened.
A report released Friday from MassBenchmarks, a journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston, found that economic growth in Massachusetts was a mere 1.9 percent during the third quarter.
In past economic recoveries, Massachusetts has shown a tendency to bounce back both more quickly and with more vigor. But third-quarter Bay State growth was even slower than the nation’s own sputtering recovery, which came in at 2 percent for third quarter.
MassBenchmarks also revised down economic growth in the state earlier in the year. In the first and second quarters of 2012, the state’s economy grew at revised annual rates of 2.0 percent and 3.0 percent respectively, well below the 4.0 percent rate of growth originally reported for each quarter earlier this year.
In the first two quarters of 2012, the U.S. economy grew at annual rates of 2.0 percent and 1.3 percent, respectively.
Economists say factors contributing to the state’s slower growth include higher unemployment (the state’s rate has risen from 6 percent in June to 6.5 percent in September) and lower spending on items subject to the regular sales tax and motor-vehicles tax, which declined by an annual rate of 1.5 percent in the third quarter.
Mattheos is aware people cut back on discretionary spending during leaner times.
“They come less often,” he said. “But I’m always looking for new customers, too. I’m in a business where a lot of people come and go, but I’ve been here in Lowell for 20 years and that should count for something.
“I’m not doing badly, I just thought it would be better by now.”
Northeastern University economist Alan Clayton-Matthews, who serves as senior contributing editor for MassBenchmarks, said in a statement that current trends suggest state economic growth will only be marginally better, 2.3 percent, through March 2013.
“Given expected productivity growth, this trend is consistent with an expectation of virtually no net employment growth in Massachusetts over the next six months,” he said.
Economists also blame difficulties in Europe and the global growth slowdown as drags on the state’s economy. Through Aug. 31, state exports were down 5.9 percent compared to the same period last year. In contrast, U.S. exports grew 5.6 percent during the same period.
As far as employment goes, Greater Lowell has added just 1,000 jobs in the year ended Sept. 30, according to the Massachusetts Executive Office of Labor and Workforce Development. That brought total employment in the region for September to 118,100, only 0.9 percent higher than what it was the same time a year ago.
State job growth over that same period was 1.6 percent.
Aaron Schindler, a regional vice president for staffing firm Adecco, said in a recent interview that companies have been reluctant to hire unless they are able to get workers who are already fully trained.
“They don’t have the resources for training,” he said, adding that the “same pockets of strength” are seen in the Massachusetts labor market, namely demand for skilled positions related to the medical-device industry and electromechanical assemblers.
“If a position pays $15 to $25 per hour, it’s in demand,” Schindler said. “The $10-per-hour jobs, not so much.”
Housing has shown signs of rebounding, but builders are in some cases responding to shifts in demand. Longtime Dracut developer Steve Coravos, along with partner Gary Campbell, recently won approval from selectmen to change a plan for a 48-unit residential complex planned for Mammoth Road from condominiums to monthly rentals that will count toward the town’s 40B requirement as affordable housing.
Condo sales in the region declined in September, year over year, although they are up year to date.
“There isn’t a market for that, and I don’t think it’s going to be there for a while,” said Coravos, of condominiums. “We’ve been extending the permits every two years, waiting for the economy to move, but it just hasn’t for that market (condominiums).”
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