While indicators such as home sales and tax collections have been strong, the report finds the state gross domestic product grew by just one percent in April and May. Bob Nakosteen is the executive editor of MassBenchmarks and a professor at the Isenberg School of Management at UMass. He says federal tax increases and sequestration have offset many positive gains at the state level.
“The very worst thing you can do as an economy recovers from a recession, from a deep recession especially, is to raise taxes and cut spending, but this is exactly what the Federal Government has done since the first of the year. So their fiscal policy is precisely the policy you would invoke at a time of expansion, not at a time of recovery.”
Nakosteen says there is little state lawmakers can do to counteract the actions of the federal government.
“The more that state policymakers can do to increase the supply of housing in the eastern part of the state, the better off the entire state’s going to be. But really when it comes to fiscal policy, the state can’t do much to counteract fiscal policy at the federal level.”
Nakosteen also cites federal policies and slower economic growth in western Massachusetts as compared to the eastern part of the state, for a rise in the unemployment rate in the region. In the Greater Springfield area, the jobless rate was 8-percent in May, which was up a half percent from April.