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The Bay State grows solidly in the first quarter, UMass journal reports

The latest MassBenchmarks Bulletin indicates that the Massachusetts state economy experienced relatively strong growth in the first quarter of 2013, growing at a rate of 3.9 percent as compared to the U.S. real gross domestic product rate of 2.5 percent. Payroll employment in the first three months of 2013 grew at a 2.9 percent annual rate and wage and salary income (as estimated from state withholding taxes) grew at a stunning 19.9 percent annual rate during the same period. MassBenchmarks economists owe a significant portion of this income growth to sizeable bonus payments made to workers in the state's financial and professional services sectors during the first quarter of the year.

However, with a decline in payroll employment and weaker than expected withholding and sales tax revenues that occurred in March, this burst of recent growth is unlikely to be repeated in the second quarter of 2013. In addtion, the federal budget sequestration continues to hamper the Commonwealth's leading industries — including health care, higher education, and research and development, which will likely result in a slow down over the next two quarters.

MassBenchmarks is published by the University of Massachusetts Donahue Institute in cooperation with the Federal Reserve Bank of Boston.

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