UMass Donahue Institute
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The Benchmarks Bulletin

State Economy Grows Robustly in Q4, UMass Journal Reports

Difficulties persist for the long-term unemployed, the young, and the undereducated

Massachusetts real gross domestic product grew at an estimated annual rate of 5.5 percent in the fourth quarter of 2013 according to the MassBenchmarks Current Economic Index, released today by MassBenchmarks, the journal of the Massachusetts economy published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston. In contrast, according to the U.S. Department of Commerce, national real gross domestic product grew at an annual rate of 3.2 percent during the same period.

In 2013, state economic growth outpaced that of the nation in three of four quarters. In the first quarter, economic activity in Massachusetts grew at a 3.5 percent annual rate versus 1.1 percent for the U.S. In the second quarter, the Massachusetts economy expanded at a 1.9 percent annual as compared to 2.5 percent for the U.S. And in the third quarter, economic activity in Massachusetts grew at a revised 5.5 percent annual rate while the nation expanded at a 4.1 percent rate.

"The Massachusetts economy appears to be benefitting from improving conditions in national and international economies, and by increasingly confident households who are demonstrating a willingness to spend," noted Alan Clayton-Matthews, MassBenchmarks Senior Contributing Editor and Associate Professor of Economics and Public Policy at Northeastern University, who compiles and analyzes the Current and Leading Indexes.

Merchandise exports ended the year (through November) up 4.3 percent after having fallen 7.7 percent in 2012. The recovery in export activity is due in part to improving conditions in Europe, which seems poised to grow in 2014. "Household balance sheets have strengthened considerably, fortified by four years of steady growth in employment and incomes, and more recent improvements in the stock market and home prices," noted Clayton-Matthews.

The pace of state growth in the fourth quarter was driven by strong employment growth, rising incomes, and improving consumer spending. In the fourth quarter, state employment grew at a 3.0 percent annual rate (representing almost 25,000 net new jobs) while wage and salary income in the Commonwealth — as estimated by withholding tax revenues — grew at a 12.3 percent annual rate. Spending on items subject to state regular and motor vehicle sales taxes rose at a 9.2 percent annual rate. Between the fourth quarters of 2012 and 2013, employment in Massachusetts grew by 1.6 percent, wages and salaries by 5.9 percent, and spending on taxable items by 6.9 percent.

However, the rising tide is not lifting all boats. Unemployment remains a big problem in Massachusetts and, at 7.0 percent the state's unemployment rate remains slightly higher than that of the nation. Conditions are particularly difficult for the long-term unemployed, the young, and the poorly educated. In 2013, the annual average unemployment rate (from the Massachusetts Current Population Survey) for persons under 25 years old was 15.8 percent. For those with less than a high school education it was 20.1 percent.

The MassBenchmarks Leading Economic Index for December is projecting a continuation of very solid growth in the first half of the year, predicting that real Massachusetts GDP will grow at a 5.0 percent annual rate in the first quarter and a 4.7 percent rate in the second.

MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston. The Donahue Institute is the public service, outreach, and economic development unit of the University of Massachusetts Office of the President. The Current and Leading Indexes are compiled and analyzed by Dr. Clayton-Matthews, Associate Professor of Economics and Public Policy at Northeastern University and released quarterly by MassBenchmarks.

For a full breakdown of the latest indexes, click here. A comprehensive analysis of the state of the Massachusetts economy can be found in the most recent issue of MassBenchmarks.

For more information please contact:

Dr. Alan Clayton-Matthews
Senior Contributing Editor, MassBenchmarks
Associate Professor of Economics
and Public Policy
School of Public Policy and Urban Affairs
Northeastern University
(617) 512-6224

Dr. Robert Nakosteen
Executive Editor, MassBenchmarks,
and Senior Research Faculty Advisor,
UMass Donahue Institute
Professor of Economics and Statistics
Isenberg School of Management
University of Massachusetts Amherst
(413) 545-5687


Dr. Michael Goodman
Co-Editor, MassBenchmarks
Associate Professor of Public Policy
and Chair
Department of Public Policy
University of Massachusetts Dartmouth
(617) 823-2770


Daniel Hodge
Managing Editor, MassBenchmarks
Director, Economic and Public Policy Research
University of Massachusetts Donahue Institute
(413) 577-2393

For timely and comprehensive analysis of the Massachusetts economy, please visit MassBenchmarks at