AMHERST — Massachusetts’ economy is being outpaced by the nation, economists said Wednesday.
The commonwealth’s real gross state product increased at an annual rate of 2.2% in the third quarter, according to MassBenchmarks — a study of the state’s economy by The University of Massachusetts Donahue Institute.
Inflation is driven by consumer and investment demand and geopolitical factors, including the effect of the ongoing Middle East war on oil prices and tariffs, according to the report.
MassBenchmarks bases its conclusions on state tax and withholding data, as well as other indicators.
U.S. GDP increased at an annual rate of 3.4% in the third quarter, according to the U.S. Bureau of Economic Analysis.
Massachusetts GDP grew at annual rates of 4% in the first quarter and 2.7% in the second quarter, while U.S. GDP grew at annual rates of 2.5% in the first quarter and 2.2% in the second quarter.
The state’s growth seems to be driven by significant investments in AI and data centers across the country, the report said.
But that opportunity comes with risks, including higher interest rates and higher costs.
MassBenchmarks said the Massachusetts labor market continues to reflect a low-hire, low-fire environment.
Payroll employment in the third quarter of this year, relative to the third quarter of last year, inched up by 0.3% in both Massachusetts and the U.S. But, relative to the second quarter of this year, it fell at an annual rate of 0.4% for Massachusetts, while growing by 0.2% in the U.S.
Massachusetts wage and salary income, estimated by MassBenchmarks, grew at a 4.9% annual rate in the third quarter.
And consumers seem to be cooling off.
Spending on items subject to the Massachusetts regular sales tax and motor vehicle sales tax fell 9.3% in the third quarter on a seasonally adjusted annual basis, after rising by 33.2% in the second quarter.
Read the original article on MassLive. Add MassLive as a Preferred Source by clicking here.
