Mass. Economists Issue Sequestration Warning
The editors of a statewide economic journal have a positive view of the Massachusetts economy for this year, but warned today that the pending automatic federal budget cuts that would take effect later this week could levy a blow to economic growth.
The editorial board of MassBenchmarks, produced by the Donahue Institute of the University of Massachusetts, said the across-the-board cuts, also known as "sequestration," would especially impact the state's defense and technology sectors, which the state depends on "disproportionately." Cuts would also impact universities, which depend on federal research grants from several agencies, including the Department of Defense, the National Institutes of Health and the National Science Foundation.
In addition, the editors said the Bay State's health sector receives considerable federal funding that could be jeopardized, especially research grants from such agencies.
"All these sources of federal support are in jeopardy, but the extent of the cuts remains unknown and their likely impacts on the Massachusetts economy are hard to predict. Nevertheless, consumer and business confidence will likely continue to decline, which may hinder the spending plans in both sectors," the board wrote.
The warning comes after a "relatively good year" for the state's economy in 2012. The board said payroll employment grew more than its national counterpart, and state gross domestic product growth exceeded national growth.
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