Mass. Economy Keeps Shrinking, Despite National Growth

The Massachusetts economy shrunk slightly in the final months of 2009 — even as the national economy grew by 5.7 percent, its fastest pace in six years.

The state's gross domestic product dropped 0.2 percent in the fourth quarter, according to the MassBenchmarks report by the University of Massachusetts.

However, economist Alan Clayton-Matthews, who contributed to the report, said the numbers may overstate the difference between the national and state economies, partly because the Commerce Department uses different methodology to measure productivity.

He said there are strong signs the state's economy has started growing, including job gains in several key industries. "Our manufacturing sector actually gained employment for the last two months in a row, so I think going forward we'll see that strength relative to the U.S. economy," Clayton-Matthews said.

Still, he said the numbers do reflect unique characteristics of the state economy, noting that the national surge in GDP was driven largely by consumer spending. "We have a much higher proportion of wealthier households than the rest of the nation, and wealthier households cut back more on spending than other households," he said.

The report says the Bay State's economy has probably already started growing, but slowly. It estimates state GDP will climb around 1.1 percent in the first half of this year.