While housing and immigration trends loom as obstacles, the Massachusetts economy is poised to experience low unemployment rates in the coming years, although job growth is expected to slow in the face of labor force constraints, according to a newly released economic outlook.
"The upshot is that employment growth is projected to decline in the face of full-employment demand, a situation that hasn't occurred in recent history," according to the outlook, assembled by Alan Clayton-Matthews of Northeastern University.
The outlook, released Tuesday at the annual New England Economic Partnership conference at the Federal Reserve Bank, forecasts that real state product is expected to grow at a 2.2 percent annual rate for the period between 2016 and 2021.
Limited access to affordable housing could discourage workers from moving here and drive others out, and federal policies that discourage immigration could also cut into the state's labor force, but the forecast sees opportunities for Massachusetts workers to boost their incomes.
"Tight labor markets are good for workers, and this is finally expected to lift both nominal and real wage growth," the report said. "This is expected to result in wage and salary income growth that will average 4.1 percent annually."
"None of us over the next 18 months see any signs of a recession," said Jeff Carr, NEEP director and president of Economic and Policy Resources Inc., adding that the region is experiencing the longest sustained recovery since records were kept in the 1850s. He later added, "It's slow growth as you go."
Greg Bird, an economist at the New Hampshire Center for Public Policy Studies, said the New Hampshire economy is "doing quite well," although labor supplies loom as an impediment throughout the region.
"We might be running out of people to employ," he said.
In Massachusetts, earnings, income and output over the five-year period ending in 2021 are expected to grow at roughly the same rate as 2011-2016, a period of slow but steady economic expansion.
With employers eager for workers, Massachusetts has benefited from immigrants from other countries, the report said, citing as a risk "the chilling effect of [President] Trump's immigration policies on the state's lifeline of immigrants, from foreign students to tech workers to home health aides."
National employment trends favor the state's base of science and technology jobs and educated workers, according to the report, but cost of living and housing affordability woes are real issues for people who are making choices about where to live and work.
"This could keep households from moving to the state and drive Massachusetts families to find work in more affordable regions," the report said.
Legislative and executive branch officials were unable to agree this year on a long-term borrowing bill to boost the state's affordable housing supply, but the so-called housing bond is expected to gain traction in 2018.
Comparing average annual growth rates for 2011-2016 to the 2016-2021 forecast period, the report concluded that the Massachusetts labor force will continue to grow at 0.7 percent, the unemployment rate will fall to 3.7 percent from 5.5 percent, personal income will rise to 4.4 percent from 3.7 percent, gross state product will rise to 2.2 percent from 1.8 percent, and population growth will fall to 0.5 percent from 0.6 percent.
"The theme of this conference is we're demographically constrained," said Clayton-Matthews, noting the state's aging population and the "big positive" role that international immigrants have historically played in the Massachusetts economy.