Report: Mass. Economy Slowed Last Quarter

The growth of the Massachusetts economy slowed last quarter to an annualized rate of 2.3 percent, according to the latest MassBenchmarks estimate.

In comparison, the U.S. economy grew at an annualized rate of 2.8 percent in the fourth quarter of 2011, according to figures from the U.S. Commerce Department released Friday. The MassBenchmarks study says it's the first time since mid-2010 that the state economy lagged behind the nation's growth.

The report forecasts a return to stronger growth in the first half of 2012.

"Every quarter since the first quarter of 2010, the state had grown faster than the nation, and we knew at some point we were going to come down to earth, that we were going to have to be led by the national growth rate, and this is what happened this quarter," said report editor Robert Nakosteen.

Earlier in 2011, Massachusetts' economy grew 3.2 percent in the third quarter, 4.1 percent in the second quarter and 1.9 percent in the first quarter, respectively, according to the report.

MassBenchmarks, a publication from the University of Massachusetts Donahue Institute and the Federal Reserve Bank of Boston, says last quarter's slowdown is reflected in part in state jobs figures. The state gained only 400 net jobs over the last six months of 2011 (see chart below).

While the report marks potential headwinds ahead, such as lingering concerns about European economies, it forecasts a return to stronger growth in the first half of 2012. Led by consumer spending, the MassBenchmarks study expects the state economy to grow 3.5 percent in this first quarter and 4 percent in the second quarter of 2012.

"We expect the economy to grow even faster, say by mid-year of 2012," Nakosteen said. "But all this is qualified by, 'Let's wait and see what happens overseas.' "

Nakosteen says Massachusetts is more exposed than other states to the risk of a European recession because the state has so many trading partners in the eurozone.

With additional reporting by WBUR's Rachel Rohr

With your mouse, hover over the charts for specific monthly data.

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[asset title="Mass. Unemployment Rate In 2011, By Month"]2012/wbur_0120_unemployment/2.html[/asset]