Weaker recovery is projected for Mass.

State economy may be as vulnerable as rest of US, revised data suggest

By Megan Woolhouse
Globe Staff / April 8, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

Massachusetts faces a best case scenario of a “disappointingly slow’’ recovery, a radically changed view of the trajectory of a state economy that was once thought to be outpacing the nation’s, according to the assessment of economists from several local universities and the Federal Reserve Bank of Boston.

This bleaker assessment of economic conditions, released yesterday by the University of Massachusetts, follows recent revisions of employment data by the Labor Department showing the state did not add as many jobs emerging from the recession as first thought and was not at the forefront of the nation’s recovery.

The revised data show the state added just 28,000 jobs over the past year, compared to initial estimates of about 45,000, a pace more in line with the slow national recovery. While the revisions also showed that the state’s recession was not as deep as first thought, the weaker rebound makes the state more vulnerable to shocks weighing on the national recovery, the economists said.

They warned that a slow recovery could be derailed by a variety of factors, from spreading turmoil in the Middle East, to a worsening of the European debt crisis, to sharp spending cuts and layoffs in state and local government.

“Any of these factors, or some combination of them, could alter the course of the national and state economic recovery,’’ the economists said in a summary of their April 1 discussion. “If we are lucky and these risks remain at bay, the state is in store for a steady, but disappointingly slow recovery.’’

These economists constitute the editorial board of MassBenchmarks, a UMass journal. Their analysis of conditions were made during a recent meeting in advance of the publication of a quarterly economic snapshot of the state. The snapshot, which estimates the growth rate of the Massachusetts economy, is scheduled for release at the end of this month.

While the pace of recovery has been slow, the state economy is improving, adding jobs in each of the last five months, including more than 15,000 in February. The unemployment rate in Massachusetts was 8.2 percent in February, down from 8.8 percent a year earlier. Still, more than 288,000 people in Massachusetts remain unemployed, and slower economic growth could make it harder for them to find jobs.

The analysis by the editorial board economists takes the “short view,’’ said Greg Bialecki, the state’s secretary of Housing and Economic Development. Despite the recent revisions, he said, the state has fared better over the past few years than other parts of the country, and certainly better than it did during and after the downturns of 2001 and the early 1990s, when Massachusetts lagged far behind the nation as a whole.

“We’ve done a lot better than in two prior recessions,’’ he said. “I don’t think this new data and new interpretation changes any of those basic conclusions.’’

The Labor Department revises state data each year as more information becomes available from employers and statistical agencies. While the most recent revisions, released in March, showed a slower recovery, they also depicted a less severe recession for the state.

The state lost 143,000 jobs, or 4 percent of employment, compared with the initially reported 167,000, or 5 percent. Additionally, the unemployment rate peaked at 8.8 percent, instead of 9.5 percent.

Unlike the two prior recessions, the most recent recession did not center on the state’s technology sector, a key driver of the Massachusetts economy.

In fact, said Alan Clayton-Matthews, a member of the UMass journal’s editorial board, technology has led the current recovery. He also said there has been stronger than average growth in business and professional services, which includes jobs in consulting, computer systems, and scientific research and development.

“The last two recessions in Massachusetts were deeper and longer than in the country,’’ he said. “This recession was shallower and shorter, and we’re not lagging the US in growth.’’

Michael D. Goodman, the chairman of the public policy department at the University of Massachusetts Dartmouth and co-editor of MassBenchmarks, said on balance, the milder recession and slower recovery have caused employment levels to end up in about the same place as before the recent data revisions — albeit it with less momentum to drive the recovery forward.

“It doesn’t change the position we’re finding ourselves in’’ now, Goodman said. “Muddling through this is the most optimistic scenario.’’

Megan Woolhouse can be reached at