Bay State economy sputters in Q1
The Bay State economy shrank during the first three months of the year, the second straight quarter of less growth than the country, which also saw disappointing growth for the first months of 2017.
In the first quarter of the year, Massachusetts’ gross domestic product fell by 0.5 percent, according to the economic journal Mass-Benchmarks. The decline is largely because of slow wage and income growth, despite strong gains in employment, said Alan Clayton-Matthews, a Mass-Benchmarks editor and professor at Northeastern University.
Still, it is not time to panic, Clayton-Matthews said. The state’s labor market has remained strong, and consumer and business confidence are high.
“I’m not worried that it means the economy is shrinking or going into a recession,” he said. “The problem that caused it was low wage and salary income indicators that may be affected by the bonus season and doesn’t necessarily mean households are losing income.”
While the state’s GDP decreased, the country’s increased by a paltry 0.7 percent. In the last quarter of 2016, Massachusetts grew by 1.2 percent compared to 2.1 percent nationally. Clayton-Matthews said growing slower than the rest of the country is a red flag, but it is too soon to say if it is a temporary blip or indicative of structural economic problems.
But even as Massachusetts’ GDP number disappointed yesterday, so did national economic growth, with the weakest GDP in three years. Growth last quarter was hampered by slow consumer spending, experts said, while much of the decline could be explained by one-time factors, including a relatively mild winter that lowered utility spending.
Experts said they expect the economy to rebound this quarter.