Massachusetts Economic Growth Up, but Might Not Continue

The U.S. economy grew slower than expected in the first quarter of 2013. Massachusetts on the other hand, exceeded expectations. That’s according to a report published Friday by the UMass Donohue Institute.

The state’s gross domestic product (GDP) grew at a rate of 3.9 percent over the first three months of the year, well above the national rate of 2.5 percent. UMass Economics Professor Robert Nakosteen says that growth is due to a strong high-tech economy in the state, a recovering housing market, and an up-tick in consumer spending. But the state’s unemployment rate has stayed about the same -around 6.5 percent- for the past year. And Nakosteen says that’s not likely to improve, partly due to recent federal budget cuts.

“The infamous sequester, and the increase in the social security payroll tax, are both now providing real headwinds to further economic growth, so there has not been much improvement in our labor force of late, and the prospects are not good for the near-term future.”

Nakosteen says he expects the state’s economic growth to slow over the next six months – closer to 3 percent. That’s still positive and nowhere near recession levels, he says, but not as strong as the early part of this year.