Economic growth in Massachusetts was moderate in the second quarter but outpaced the growth rate of the US economy, while inflation in the Boston metropolitan area ran “meaningfully hotter” than the nation, according to a new report.
The Aug. 3 snapshot from MassBenchmarks, which is published by the University of Massachusetts Amherst Donahue Institute with contributions from other public and private research institutions, found real gross state product in Massachusetts increased at an annual rate of 2 percent in the second quarter, down from 2.4 percent in the first quarter.
US GDP rose at an annual rate of 1.5 percent in the second quarter after growing at a 2.1 percent clip in the first quarter.
“Growth held its moderate pace through the first half of the year despite persistent geopolitical and market uncertainty, including the on-and-off war with Iran, swings in oil prices, and questions about the sustainability of the AI investment cycle,” the publishers of the economic journal said. “The Massachusetts and US economies are now expanding moderately, with the state’s small growth advantage roughly matching its productivity differential.”
Payroll employment expanded at a 1.1 percent annual rate in Massachusetts and 0.9 percent in the US in the second quarter, following 0.3 percent employment growth in both economies in the first quarter.
“The state’s labor force has continued to shrink, but productivity gains — running about half a percentage point above the corresponding US measure — continue to keep Massachusetts growth slightly ahead of the nation’s,” Alan Clayton-Matthews, senior contributing editor, said in a statement. “Relatively slow job growth reflects the demographics of an aging workforce, years of falling fertility rates, and immigration policies that sharply reduced net international migration.”
The Consumer Price Index rose at a 13.1 percent annual rate in Boston on a seasonally adjusted basis. Core inflation, a metric that excludes food and energy, was 7.9 percent in Boston and 2.9 percent in the US.
Looking ahead, MassBenchmarks projects Massachusetts GDP growth of 2.3 percent in the third quarter and 2.5 percent in the fourth.
