State economy grows faster than US, but slowdown coming, UMass reports
By Megan Woolhouse | Boston.com | July 27, 2012
Massachusetts’ economy continued to grow at faster rate than the nation’s largely due to the strength of the state’s technology industry, but national and international developments are expected to slow the pace to the recovery here, according to a quarterly analysis released Friday by the University of Massachusetts.
The state economy grew at an annual rate of 4 percent between April and June, more than double the national rate, according to UMass. The US Commerce Department reported Friday the nation’s economy grew at a 1.5 percent, a sluggish pace, but slightly better than economists forecast.
“The national report was stronger than expected but still much weaker than what’s going on here in Massachusetts,” said Michael Goodman, an editor of the analysis and public policy professor at the University of Massachusetts at Dartmouth. “With all the stuff going on in the world, the risk factors on the national horizon, one has to wonder how long this can last.”
Uncertainties on the horizon include unresolved economic crisis, including particular concerns about deep-seated problems in Greece, Spain, and Italy. Massachusetts depends heavily of European commerce. About 40 percent of the state’s exports are sold in Europe, about double what the nation as a whole exports there.
A slowing of consumer demand in another of the state’s biggest export markets, China, could also slow the Massachusetts economy, UMass analysts said.
Alan Clayton-Matthews, a Northeastern University professor who did the economic analysis for the report, noted that Massachusetts merchandise exports declined in first five months of the year.
“We’re expecting things to get worse,” Clayton-Matthews said. “It looks like we’ve been lucky so far.”
The state growth estimates are published by MassBenchmarks, quarterly economic journal published by UMass. Clayton-Matthews said the state showed unexpected strength in wages, salary, and income in recent months.
He attributed that to workers who have jobs receiving more hours and increased employment in the high tech sector, which tends to pay high salaries.
Among Massachusetts key high tech products are semiconductors and semiconductor equipment. Demand for these products slowed last year after the earthquake in Japan and flooding in Thailand, where many companies buy these Massachusetts products for manufacturing electronics. Those sales have steadied this year, though they are not growing at an “explosive” clip, Clayton-Matthews said.