Massachusetts Now Feels the Sequestration, Says Isenberg Professor

July 31, 2013  

According to Isenberg professor and economist Robert Nakosteen, the impact of the federal budget sequestration is now evident in the Bay State's latest economic indicators, just released in the July 31 edition of Benchmarks Bulletin. Nakosteen is executive editor of Mass Benchmarks, a journal devoted to the state's economy and published by the UMass Donahue Institute in cooperation with the Federal Reserve Bank of Boston. Perhaps most eye-catching, real gross domestic product (GDP) for Massachusetts grew at an annual rate of 0.8 percent in the second quarter of 2013, according to the publication's Current Economic Index. In contrast, the nation's real GDP grew at an annual rate of 1.7%.


The sequester's disproportionate impact on Massachusetts reflects the federal government's reduced spending in basic and applied research as well as higher education--all Massachusetts strengths. Fewer federal dollars are a negative end unto themselves; in addition, private investors become more reluctant to direct capital toward the state's technology industries, emphasizes Nakosteen. "The sequestration, of course, is only part of the second quarter's somber story," he continues. "The state's poor export performance in Europe and the end of a payroll tax holiday have also been contributing factors. But I place the sequestration at the top of the list."


Read more at the Boston Globe and The Springfield Republican.


Read Benchmarks Bulletin, July 31, 2013