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Mass. economy outpaces US in first quarter growth

Massachusetts’ economy grew at a good clip in the first three months of the year, even as economic growth nationally nearly ground to halt, according to state and federal economic reports released Wednesday.

The state’s economy expanded at an annual rate of 2.6 percent between January and March, according to the University of Massachusetts and the Federal Reserve Bank of Boston. The national economy barely grew at all during that period, expanding at a rate of 0.1 percent after growing 2.6 percent at the end of last year, the US Commerce Department reported.

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Economists said the national slowdown appeared temporary, blaming it on severe winter weather that shut businesses, delayed construction projects, hurt housing sales, and pinched consumer spending. Massachusetts — supported by its technology, life sciences, and financial services industries — fared better.

The state’s unemployment rate has fallen for the last three months, to 6.3 percent in March from 7.1 percent in December. The national average in March was 6.7 percent.

The improving job market here, combined with strong wage and salary growth, added support to business and household spending and provided a lift to the state economy, said Alan Clayton-Matthews, a Northeastern University economics professor who compiled the state data for MassBenchmarks, an economics journal published by the University of Massachusetts.

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In recent years, the Massachusetts economy has generally outperformed the nation’s.

“Economic expansion is starting to lift all boats, as it’s supposed to,” Clayton-Matthews said. “This is shaping up to be the strongest year of the recovery so far.”

Personal income, estimated based on state income tax withholding, rose at a 15 percent annual rate, and spending on products subject to the state’s sales tax and motor vehicle tax grew at 6.1 percent during the first quarter. Clayton-Matthews said that was probably due to better-than-average bonuses for workers as a result of the sharp rise in stock markets last year.

The economic expansions, however, has been uneven. Long-term unemployment, both in the state and the nation, remains high and has declined more slowly in Massachusetts than in the nation as a whole, Clayton-Matthews said.

About 4.3 million Americans, including 88,000 in Massachusetts, have been looking for a job for six months or more, according to the US Labor Department of Labor. The number of long-term unemployed in the state is more than double that of a decade ago

The Labor Department counts people as unemployed only if they are actively looking for work. Many economists say the official jobless rate masks the weakness of the labor market.

When the underemployed and those who have given up job searches are counted, the March rate jumps to 12 percent in Massachusetts and 12.7 percent in the United States.

Younger workers are struggling in particular, said Andrew Sum, director of Northeastern’s Center for Labor Market Studies. Sum coauthored a recent study that found teens have been squeezed out of the job market in record numbers. Over the past decade or so, the percentage of working teens in the United States plunged by nearly half, to just 24 percent in 2011 from 44 percent in 2000.

“We’re not doing as well creating jobs for young people, and we’re not doing well bringing down the number of long-term unemployed,” Sum said Wednesday. “We need to make inroads there.”

Megan Woolhouse can be reached at Follow her on Twitter @megwoolhouse.
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