Cost of living still an issue for Mass.

Recently in this space I discussed the outlook — mostly sanguine — for the US economy and jobs. Today, let’s turn to the road ahead for Massachusetts.

State of the state: The local economy is riding into the new year on the same tailwinds as the rest of the country, including low unemployment, declining inflation, rising financial markets, and the prospect of the Federal Reserve cutting interest rates. How soon, and how aggressively, the Fed reduces rates will be a powerful driver of consumer spending and business investment.

Massachusetts also has added advantages: elite higher education, medical, and biotech industries; dynamic tech and finance companies; and one of the most educated and skilled workforces in the nation.

But there are headwinds.

The US economy is slowing. The cost of living here is high. Commute times are atrocious. And the new surtax on incomes above $1 million threatens to accelerate the exodus of wealthier workers and retirees to lower-tax states, especially New Hampshire and Florida.

Against this backdrop, here is a rundown of some of the more forbidding challenges to extending the state’s economic expansion into 2024.

Empty offices: The Financial District is far from the tumbleweed town it was a year or two ago. Yet many executives grumble about not being able to get employees into the office more frequently. The financial health of commercial landlords, surrounding service businesses, and the MBTA continues to suffer.

Will other employers follow the lead of companies like financial services giant State Street, which is requiring most workers to be on-site at least four days a week?

Will startup companies, taking advantage of lower rents, fill up empty office space and bring workers into town?

Will younger millennials and Gen Zers be convinced that working in the office isn’t a thing of the past — just something their parents had to do?Perhaps.

But there’s no chance of fully returning to the hustle and bustle of preCOVID days. That means reimagining the role of downtown, an undertaking that will require extensive collaboration between the public and private sectors.

Unreliable transit: Reversing the MBTA’s long, slow deterioration is essential to getting workers into town — and to preserving the region’s economic vitality.

The litany of the T’s failures is long and well documented, but there are glimmers of hope, according to the

Globe’s Taylor Dolven, who covers transportation.

“The T claims all slow zones will be gone by the end of 2024, which would be huge,” she said. “And it’s finally paying its bus drivers a competitive wage so hopefully bus service can be restored and even improve soon.”

The honeymoon is over for Phillip Eng, who started as the T’s general manager in April. He’ll need to deliver tangible service improvements in the coming year or risk losing even more riders, who are fed up with broken promises. Shaky hospital finances:

Health systems — among the state’s biggest employers — are struggling financially.

For the year ended in September, Beth Israel Lahey Health and Tufts Medicine posted steep operating losses. Mass General Brigham, the state’s largest health system, recorded a slim operating gain, but only because of one-time revenues such as federal pandemic funding.

The situation at community hospitals is so dire that the state in August approved a $180 million cash infusion for the most troubled institutions.

My colleague Jessica Bartlett has explained that hospitals are being squeezed by higher labor costs and longer stays for generally sicker patients. Moreover, there’s a discharge bottleneck caused by reduced capacity at the nursing homes and rehabilitation facilities that take recovering hospital patients.

How does a state with arguably the best medical providers and researchers have such a lousy health care system?

Housing shortage: We’re all tired of hearing that housing prices are out of control, in large part because construction hasn’t kept up with demand. Some relief may be on the way.

The MBTA Communities Act, passed in 2021, requires cities and towns served by the transit network to approve new zoning districts where it’s easier to build multifamily housing. The hope is developers will take advantage of the less restrictive rules to propose projects that wouldn’t have been approved in the past.

Brookline, Milton, Newton, and Somerville are among the suburbs that adopted new policies before a year-end deadline. Other municipalities face deadlines in 2024 and 2025.

More recently, Governor Maura Healey proposed an ambitious package of funding and policy changes to spur residential development. Administration officials say the plans could create more than 40,000 new homes. A lot is riding on how the Legislature responds.

Tax climate: After two years of wrangling, lawmakers passed a series of tax changes in September aimed at curbing the loss of people and jobs to lower-cost states.

Fiscal conservatives complain that the package doesn’t do enough to make Massachusetts more competitive, especially with the new voter-approved tax on million-dollar incomes in place. Progressives gripe that it gives too many breaks to the rich.

Will the state have more success hanging on to businesses and wealthy residents? Some early signs may emerge as the new year progresses.

Final thought: These are tough economic challenges, but they aren’t the most daunting. They pale in complexity to the existential necessity to mitigate climate change and our moral obligation to reduce pernicious inequality in wealth and opportunity.

Optimism, creativity, and commitment will be more important than ever.