This column is from Trendlines, my new business newsletter that covers the forces shaping the economy in Boston and beyond. If you’d like to receive it via e-mail on Mondays and Fridays, sign up here.
In this tenuous economy, no news is good news.
A batch of solid intel about Massachusetts landed last week in the form of the Federal Reserve’s “Beige Book” summary of economic conditions, a pair of employment reports, and new tallies on home sales and prices.
The data were telling, mostly because of what they did not contain: any glaring signs of an imminent recession or cratering of the housing market.
“Business activity in the First District was flat on average” is how the Fed summed up conditions in Massachusetts, most of Connecticut, and the rest of New England.
Against the headwinds of high inflation and rising interest rates, a “flat” reading on the economy feels like something of a relief.
By the book
The Beige Book, released eight times a year, is based on reports from directors of the regional Fed banks and interviews with business people, economists, market experts, and other sources.
In New England, tourism sustained its “strong momentum,” while retail sales were “steady amid mixed results” and manufacturing demand “softened moderately.” Prices increased at “a modest pace” and slower price growth was expected for the rest of 2023.
Commercial real estate activity was flat, and there was worry that smaller banks might “restrict lending over liquidity concerns,” putting a damper on economic activity.
However, the Fed concluded, “The outlook was mostly positive.”
Hire power
The glass-half-full attitude reflects, in good part, that the Massachusetts job market is holding up despite the Fed’s best efforts to cool off hiring by raising interest rates.
On Friday, the state said employment reached a record high in March as the number of jobs surpassed pre-COVID levels.
Employers added 16,300 jobs, bringing payrolls last month to 3.758 million — 14,600 higher than in February 2020. The jobless rate declined to 3.5 percent, matching the US rate, from 3.7 percent in February.
Unemployment stood at 2.8 percent in February 2020. The number of Massachusetts residents with a job or looking for one hasn’t fully rebounded from the pandemic, indicating that employment growth could have been even stronger if more people joined the labor force.
According to data released last week, there were 6.5 job openings in February for each unemployed worker in the state. While that’s an improvement — for employers — from a high of 8.7 last May, the rate is well above the 4.0 average in 2019.
Should we be fretting about the economy possibly contracting when the job market is still expanding?
The persistent demand for workers has confounded economists. But their consensus forecast is that employers will eventually pull back as the full impact of the Fed’s rate increases is felt and for a recession to begin sometime in the next 12 months.
Here it makes sense to highlight a point I made in last Monday’s newsletter: Some recessions are worse than others.
If there is a downturn, most forecasters expect it will be mild rather than brutal — more like the dot-com bust of the early 2000s than the Great Recession of 2007-2009.
Housekeeping
Unlike the job market, the state’s housing market has slowed as mortgage rates hover at levels not seen since before the financial crisis.
Sales of both single-family homes and condos tumbled by more than 25 percent in January through March compared with the same period last year, according to data released last week by the Warren Group. Prices are mostly rising at a slower rate, though some areas have seen modest declines.
But housing experts don’t anticipate prices to drop dramatically. That’s because Massachusetts simply doesn’t have enough housing stock to meet demand, and new construction is limited by high costs, zoning restrictions, and neighborhood resistance.
The median price for a single-family home rose 2.2 percent statewide in the first quarter and 1.3 percent inside of Interstate 495, Warren Group data show.
Bottom line
There’s something happening here, but what it is ain’t exactly clear.
Big questions loom: Are we headed into a recession? If so, how long will it last and how many people will lose their jobs?
The answers will hinge in part on the availability of credit.
As the Beige Book noted, there’s concern that banks will curtail lending after the failures last month of Silicon Valley Bank and Signature Bank.
Credit standards have tightened but Fed data haven’t shown any sustained (emphasis on sustained) decline in lending.
For now, no news is good news.
Larry Edelman can be reached at larry.edelman@globe.com.