Economists Predict More Slow Growth In N.E.
New England's economy will continue to grow slowly, but steadily in the coming years, according to a report released today by the New England Economic Partnership (NEEP), which said the region is not expected to return to its pre-recession employment level until 2015.
In Massachusetts, the economy has been growing since the summer of 2009, but has slowed since 2010. The report said the state's growth is at least as fast as the nation's and, since November 2009, the state gained 81,500 of the 143,000 jobs it lost during the recession.
Real gross state product growth will average 2.3 percent per year, while personal income growth will average 5.2 percent and wage and salary growth 5.8 percent, the report said. The expectations for moderate growth in the Bay State through the end of 2016 assume that the economic crisis in Europe and the slowing Chinese economy will be offset by increasing demand within the U.S.
The state's unemployment rate is expected to rise to 7 percent by mid-2013, from the current 6.3 as improving job prospects cause workers who have quit looking for work to re-enter the labor force. After that, the rate is expected to fall steadily to just over 5 percent by the end of 2016.
By the end of 2016, the median existing home price will still be 13 percent below its peak in 2005.
The report identified two long-term challenges for the Massachusetts workforce: the distribution of skills that will be demanded in the future is shifting toward STEM (science, technology, engineering and mathematics) and other high-skill, high-knowledge occupations, and the aging workforce and impending retirement of Baby Boomers could result in a massive shortage of skilled workers.
As for the region, NEEP said employment growth is forecast to be 1.3 percent per year with economic growth averaging 2.8 percent per year through the end of 2016. That growth is below the 2 percent and 3 percent, respectively, needed to make a significant improvement in conditions.
The report said that, after a relatively strong first quarter of 2012 with 1.6 percent growth in employment, it's not expected to be above 1 percent again until mid-2013 while remaining below 2 percent throughout the forecast period. Regional unemployment is expected to remain below the national average, but above 6 percent until 2015. Weakness in the housing market is anticipated to continue to be a deterrent to economic recovery.
According to NEEP, the fastest-growing sectors in New England include high tech, increasing by 2.1 percent; professional and business services up by 2 percent; and private education and health care services, rising 1.7 percent through 2016. Those industries include occupations that are expected to grow the fastest nationally in the next decade, including biomedical engineers, market research analysts and marketing specialists, nurses, personal care aides, home health aides, physical therapists and post-secondary teachers. Manufacturing employment in the region is growing after a period of extended decline. The growth, however, is slower than in some other sectors at 0.5 percent in 2012.
Photo courtesy of FreeDigitalPhotos.net.
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