Massachusetts economy shrinks by more than 1 percent in first quarter

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Colin A. Young

BOSTON — The Massachusetts economy hit a significant slowdown in the first quarter of 2022 as another wave of COVID-19, sky-high inflation rates and persistent supply chain problems combined to bog down growth, economic analysts at MassBenchmarks said.

MassBenchmarks, which is published by the UMass Amherst Donahue Institute in cooperation with the Federal Reserve Bank of Boston, said real GDP in Massachusetts decreased at a 1% annualized rate in the first quarter, nearly as steep as the 1.4% dip in national GDP.

The state’s economic contraction comes on the heels of a solid fourth quarter of 2021, which saw Massachusetts GDP grow at an annual rate of 7.8%.

“The sharp slowdown in growth in the first quarter reflects the impact of the omicron variant of COVID-19, continued supply chain problems, the effect of inflation on purchasing power, and weakening consumer and investor confidence,” MassBenchmarks wrote in its latest report. “As the growth-dampening effect of omicron waned in late winter and early spring, the outbreak of war in Ukraine gave an added boost to inflation, particularly for energy and food prices. At the same time, the labor market continued to exhibit strong gains in employment and wage growth, falling unemployment, and record low layoffs. Wage and salary growth per worker, however, continued to lag inflation, dampening aggregate spending power and slowing real economic activity.”

https://www.metrowestdailynews.com/story/business/2022/05/01/massachusetts-economy-shrinks-more-than-1-percent-first-quarter/9572681002/

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