So how would Massachusetts' economy fare if there is a recession? The last one, when the technology bubble burst, hit Massachusetts particularly hard.
But as WBUR's Business and Technology Reporter Curt Nickisch explains, this time the Bay State could get off relatively easy.
TEXT OF STORY:
CURT NICKISCH: The stock market dropped a little more than one percent yesterday to its lowest level in over a year, stoking fears of a recession. So you might expect headlines to follow announcing layoffs at local companies.
Well, Ted Chaloner is not seeing it. He runs a headhunting company that finds workers for Massachusetts non-profits, and companies in health care and biotech:
TED CHALONER: We have a pretty broad base of clients in a number of different sectors. We haven't seen an immediate downturn based on the last couple of weeks or we don't see direct connections between the stock market and what we're asked to recruit for.
NICKISCH: The fact is, while economists may disagree on whether we're heading into a recession or whether federal policy moves will be enough to avert one, they agree on this: New England is not going to lead the way:
ALAN CLAYTON-MATTHEWS: We're being dragged in!
NICKISCH: That's Alan Clayton-Matthews, economist at UMass Boston. He says the housing market in New England is doing better than in other parts of the country. So is commercial real estate. And so are some key Greater Boston industries such as education, health care and, above all, technology.
CLAYTON-MATTHEWS: That has been growing very robustly over the past year; there are just signs now that it might be slowing.
NICKISCH: Because of some of those relatively healthy sectors, Clayton-Matthews says it could still take a while for a downturn to really hit home here. He thinks there will be one nationally — it just depends on how severe it is.
CLAYTON-MATTHEWS: It's still likely that the recession may not be as bad here.
NICKISCH: And some think it may not happen at all - anywhere. They say it depends on President Bush's proposed stimulus package and yesterday's and future rate cuts from the Federal Reserve. Nigel Gault is US economist at Global Insight, a research firm based in Lexington. He says those government moves could well turn things around.
NIGEL GAULT: We're looking at a very bleak first half of the year. But, with the monetary and fiscal stimulus pumped in, that does create the prospect that the second half will be substantially better than the first.
NICKISCH: But it's so hard to predict he says. With all this talk of a recession, we may just talk ourselves into one.
GAULT: Unfortunately we're dealing with an economy which is driven by human beings and human nature. And there can be negative contagion: everybody getting more pessimistic. If everybody acts on that and cuts back their spending, then it can become a self-fulfilling prophecy.
NICKISCH: The good news for this region is that unlike the recession that started in 2001, Massachusetts is not as susceptible. So Bay State businesses have the luxury of watching what happens in others parts of the country first. UMass Boston economist Alan Clayton-Matthews says meanwhile you can expect from those businesses:
CLAYTON-MATTHEWS: No or little new hiring. It doesn't necessarily mean layoffs either though. I would expect that businesses will at least be in a wait and see mode.
NICKISCH: In a way, Massachusetts is reaping some benefit for being particularly hard hit during the last recession, when the tech bubble burst. That sector learned lessons and has made a secure recovery — making Massachusetts a little more recession-resistant.
For WBUR, I'm Curt Nickisch.
This program aired on January 23, 2008. The audio for this program is not available.