BOB SALSBERG, Associated Press
BOSTON (AP) — The Massachusetts economy expanded at a significantly slower rate in the third quarter than during an “unsustainable” burst of growth in the previous three-month period, economists said Thursday.
The report from MassBenchmarks, a journal published by the Donahue Institute at the University of Massachusetts, said the state’s gross domestic product grew at an estimated annual rate of 2 percent from July through September. That remained higher than the estimated U.S. growth rate of 1.5 percent, but the state GDP dropped off sharply from the 7.1 percent annualized growth from April to June.
Consumer and business spending, as measured by sales and motor vehicle taxes, declined 3.4 percent in the third quarter, the report said.
“However, this does not appear to reflect strained household budgets or weak consumer confidence, but rather a return to reality following an unsustainable 15.8 percent annualized rate of growth in the second quarter,” the economists wrote.
The outlook was far from gloomy, as the report noted that the state’s overall jobs picture remained bright during the third quarter. Wages and salaries also grew at a 7.3 percent annualized rate, exceeding income growth in the second quarter.
Alan Clayton-Matthews, a Northeastern University economist and senior contributing editor for MassBenchmarks, said the number of new unemployment claims continued on a downward trend in Massachusetts in the third quarter.
MassBenchmarks is projecting fourth quarter GDP growth of 3.6 percent, while also warning the state is vulnerable to global economic uncertainties.
There have been other cautionary signals for the state’s economy in recent weeks.
The federal Bureau of Labor Statistics reported that the state lost an estimated 7,100 jobs in September, ending 12 successive months of job gains.
In an Oct. 15 letter to legislators, state Secretary of Administration and Finance Kristen Lepore said Gov. Charlie Baker’s administration was revising downward by $145 million its overall revenue forecast for the current fiscal year. Baker has so far not ordered any cuts in the state’s $38 billion budget.
