Bay State economy humming while U.S. growth disappoints

The state economy grew at a healthy clip even as the country’s economic expansion disappointed in the second quarter, academics and officials said.

“State economic growth appears to have continued at a moderate pace,” a group of Bay State economists wrote in MassBenchmarks, an economic journal. “Although the underlying indicators were mixed, both employment and earnings grew strongly, while the unemployment rate fell.”

The state’s gross domestic product increased by 3 percent, MassBenchmarks said.

“It’s really encouraging, the state’s had such reasonable growth for such a long period of time,” said Robert Nakosteen, executive editor of MassBenchmarks and a professor at UMass Amherst. “We specialize in sectors of the economy that are in high demand in the national and global economy.”

Nakosteen said the state’s strong base of health care, education and technology is carrying the bulk of the economic load, but the construction boom in Boston has made a noticeable impact.

While good news came on the job front, spending was disappointing, the economists said, barely rising only 0.1 percent compared to a year before. Alan Clayton-Matthews, a professor at Northeastern University, said there was a significant decline in car purchases that could account for the drop.

Also yesterday, the U.S. Department of Commerce said the country’s economy grew at a tepid 1.2 percent, far below forecasts from economists who expected twice as much growth.

“While the top-line growth rate for the second quarter of 2016 was disappointing, it does not reflect the underlying growth rate of the U.S. economy, said Nariman Behravesh, chief economist at IHS Global Insight in a research note.

Still, he said the low number may have been pushed down because of a fall in business’ inventories, which can be volatile and are not necessarily indicative of the economy’s health.

“We should not panic,” he said in an interview. “Most of the reason the growth was so weak was because of a sharp drawdown in inventories.”

Behravesh and other economists expect GDP to rise again through the rest of the year, but still at a relatively modest rate.

“Looking ahead to the remainder of the year, we expect growth to remain around 2 percent over the next couple of quarters,” Wells Fargo econmists wrote in a research note.