Business experts predict state's economy is poised for recovery

Jon Chesto

The state’s economy could finally be hitting a crucial turnaround point now that the index used to track gross state product has flattened out.

The zero growth seen in October may sound disappointing, but it’s actually a promising sign. The MassBenchmarks current economic index, as calculated by Northeastern University economist Alan Clayton-Matthews, previously had been declining since spring 2008.

He said the latest MassBenchmarks leading index shows that the state’s economy would grow at an annualized rate of 0.6 percent over the next six months.

“It looks like it could have leveled out in October, and we’re on our way for slow growth over the next several months,” Clayton-Matthews said.

In comparison, the index that measures the state’s current economic conditions fell at an annualized rate of 1 percent in September, and at 1.1 percent in the three-month period that ended on Sept. 30.

Meanwhile, the comparable measure of the nation’s economy – gross domestic product – grew at an estimated annualized rate of 3.5 percent over the same three-month period.

Local economists had anticipated that the state economy would flatten out in the final three months of this year, and start to follow the nation into a recovery. The state’s labor market wasn’t predicted to start to turn around until the third quarter of next year.

“If anything, it looks like we’re on target for that forecast, or doing slightly better,” Clayton-Matthews said.

The state’s labor market only shed 900 jobs in October, and the state unemployment rate actually dropped that month to 8.9 percent from 9.3 percent in September.

Clayton-Matthews said he has tracked other encouraging indicators: He said the total value of the state’s exported merchandise has been rising since April, and withholding and sales tax collections – when adjusted for seasonal fluctuations – rose for two straight months in October and November.

Even the real estate industry is showing signs of strength. The state’s home sales, when adjusted for seasonal changes in buying and selling patterns, have risen each month since November 2008, Clayton-Matthews said. And the state’s seasonally adjusted median price for single-family homes bottomed out at $265,800 in March, before rising in most months and flattening out at $289,800 in October, he said.

Patriot Ledger writer Jon Chesto may be reached