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MassBenchmarks: Sluggish state economy at the mercy of federal policy makers

After coming out of the recession more quickly than the nation, the Massachusetts economy has been growing sluggishly. The state unemployment rate has been rising even as the national rate has been falling, with young workers and those with less than a college education facing limited opportunities, low wages and little hope for much change in the immediate future.

Although the state housing market is emerging from a seven-year slump and the low unemployment rates and income growth of the state’s “knowledge class” remain steady, the state economy, heavily dependent on federal dollars to support its health, defense, and higher educational sectors, has begun to feel the impact of reductions in the federal budget. Compounding these problems is the federal government shutdown and the far more serious prospect of a debt ceiling crisis.

The sequester, the budget battle, and debt limit brinksmanship threaten the state’s fragile and sluggish recovery and only extend the pain being experienced by families and businesses still awaiting an opportunity to participate in a recovery that is now several years old.

MassBenchmarks is the journal of the Massachusetts economy and is published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

Read the full bulletin, "Sluggish state economy at the mercy of federal policy makers declares the MassBenchmarks Editorial Board," (10/1/13)

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University of Massachusetts Amherst

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