Economists check in on state’s rough employment picture

Gov. Charlie Baker’s proactive strategies to contain COVID-19, including stay-at-home advisories in the spring and a cautious reopening strategy in the summer, contributed to the state lagging the nation on the employment front this year, according to a new analysis by local economists.

Members of the MassBenchmarks editorial board spent considerable time at their meeting last month discussing the contrasting local and national employment pictures, according to the board. The group attributed some of the differences to the fact that Massachusetts and the northeastern United States suffered from the most significant initial outbreaks of COVID-19 and that health care and higher education, which usually temper the impacts of economic downturns, experienced interruptions and instability over the last several months.

The economists noted that as states embarked on different reopening strategies this summer, unemployment trajectories differed around the country.

The national unemployment rate for September was 7.9%, down from a peak of 14.7% in April.

“The situation in Massachusetts appeared to be much worse, as measured by unemployment,” the economists wrote Tuesday, summing up their private talks.

In June, Massachusetts recorded the nation’s highest state unemployment rate, at 17.7%, and remained at 16% or higher from April through July. The state jobless rate fell to 11.3% in August, but still ranked sixth highest in the nation.

The economists also cautioned that the recent drop in the state’s unemployment rate “appears more due to” more than 127,000 people dropping out of the labor force than to the more than 65,000 individuals gaining jobs. The number of new filers for state unemployment benefits “continues to be high,” they wrote, with between 14,000 and 18,000 new claims every week since August, and over 22,000 in the weeks ending Sept. 19 and Sept. 26.

The board includes economists from the Federal Reserve Bank of Boston, State Street Bank, Federal Deposit Insurance Corporation and eight universities in Massachusetts, including Harvard University, Massachusetts Institute of Technology, Northeastern University, Tufts University, Boston University and the University of Massachusetts.

Housing and Economic Development Secretary Mike Kennealy on Tuesday defended the state’s adoption of more stringent reopening standards than other states, and joined other administration officials in projecting a bullish tone about economic conditions and virus preparations for the fall and winter.

“It was in those early days that we asked so much from everyone to limit travel, to work from home, or to outright close the doors to their businesses,” Kenneally said at a press conference Tuesday afternoon. “But thanks to everyone’s buy-in to the standards, the Massachusetts economy is open, commerce is taking place and we’re keeping the spread of the virus to a minimum.”

COVID-19 cases continue to creep up in Massachusetts, but Baker noted the current numbers are still nowhere near as high as the initial surge.

Looking ahead, the 15-member MassBenchmarks board concluded there will be “significant constraints on growth and negative consequences for the state and national economy” as long as supply chain bottlenecks and social distancing restrictions remain in place. The board said state forecasting is difficult given uncertainties about the presidential election, business conditions, a resurgence of the virus, and the availability of additional federal aid.

However, the board said it generally agreed with results of the Wall Street Journal’s September survey of economists.

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