Forecast Calls for Bright Economic Future

Evidence has begun to pile up, making it difficult for even the most skeptic to deny that the economic recession has ended and recovery has begun. While the estimates on just how long a full national recovery will take span various numbers of years, it is encouraging to learn that Massachusetts is ahead of the curve. (Image courtesy: http://www.neepecon.org)

An economic forecast released at the New England Economic Partnership’s (NEEP) conference in Boston this month showed that Massachusetts fared better than the national average during the recent recession and will likely see a full recovery faster than the national average.

“The state's recovery appears to be firmly on track,” the NEEP’s forecast said in regards to Massachusetts. “Payroll employment should grow robustly in the second and third quarters, boosted by the hiring for the 2010 Census.”

Most economists agree that the nation-wide recession began in January of 2008 and lasted 20 months. Massachusetts’ economy, however, remained unaffected until April of 2008, meaning the state’s localized recession lasted only 16 months. Furthermore, only 5% of Massachusetts’ jobs were lost to the recession, with the state’s unemployment rate rising to a maximum of 9.5%. Nationally, 6% of jobs were lost, with the national unemployment rate rising to a maximum of 10.1%.

At the current pace at which the state’s economy is predicted to expand, there will be over 200,000 new jobs in Massachusetts by 2015. Moreover, just four years after its start, by the middle of 2013, the state will have recovered all jobs lost due to the recession. This fact is particularly positive when compared to the “downturn” of the early 1990s, from which it took the state six years to recover, and the “technology bust” of 2001, from which the state has never fully recovered.

During the first quarter of 2010, Massachusetts created approximately 12,000 new jobs. In part because of this increase, from March to April, the state’s unemployment rate dropped slightly from 9.3.% down to 9.2%.

“This is super, surprising, good,’’ Alan Clayton-Matthews, professor of economics at Northeastern University, expressed. “It’s hard to believe that these job numbers are all real, but everything we are looking at supports positive and strong job growth.’’

The NEEP’s report also outlined a handful of negative issues facing the state. When considering unemployed individuals and those newly entering the workforce, nearly 300,000 citizens are without jobs. In fact, the report projected that Massachusetts’ unemployment rate will remain at about 9% through at least 2011. Additionally, as housing tax credits expire, home values are expected to level off, as are sales of homes in general. (Image courtesy: http://bit.ly/cPXjJk)

Mark Zandi of Moody’s Economy.com, and attendee of the NEEP’s conference, reported being optimistic about the economy as a whole, but described the ever-increasing national debt as the “big elephant in the room.” Unless the government does something to curtail its loses, such as by increasing taxes, Zandi fears the deficit may prevent a complete, national economic recovery.

“These numbers may be too good to be true,’’ Andre Mayer, senior vice president for research at Associated Industries of Massachusetts, chimed in, “but they still confirm that we are on positive trend.’’

Hearing positive information about Massachusetts’ economy is always uplifting, but the concerns of more cautious economists, such as the growing budget deficit, must still be acknowledged. Although, it has essentially been demonstrated that an economic recovery has begun, to continue moving forward everyone must be vigilant and proactive. We will recover, but we are going to have to fight for it.

[Sources: http://bit.ly/a57dgE, http://bit.ly/bQHkWz, http://bit.ly/cJJAkT]