Evan Horowitz

We’re in a recovery, so why is the economy shrinking?

To really count as “recovering,” our economy needs to be growing. But just this morning, we learned that the US economy actually shrank 2.9 percent in the beginning of 2014, which is quite a lot.

Does that mean we’re headed for another recession? Not necessarily. It could be a temporary setback. But even if it does prove temporary, the fact that our economy has been shrinking shows how fragile the recovery really is.

After a deep recession like the one we had in 2007-2009, you expect to see growth that’s higher than normal, sometimes called catch-up growth. But in recent years, growth rates in the US have remained relatively low.


Of course, the US is a big place, and some regions do seem to be in the midst of a rapid expansion. Almost all of them are west of the Mississippi, though. Here in the Northeast, state economies have been struggling.

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In 2013, there were 27 other states that outperformed Massachusetts, including West Virginia, Texas, California, Kansas, and Arkansas. Not only was overall growth in the Commonwealth a relatively low 1.6 percent but growth per person (or per capita, as it’s called) was an anemic 0.9 percent.

Nor is Massachusetts alone in this. The slowdown seems to have affected the entire Northeast region. In every state from Maryland to Maine, the growth rate in 2013 was below 2 percent, and only Vermont outpaced the US average.

The good news is that Massachusetts has an enviable research sector and the best-educated workforce in the country -- which gives the state the ability to adapt to economic changes as they come. What is more, we remain one of the wealthiest states in the US, and if we were an independent country, we would be the 4th richest nation on the planet.

Looking ahead, though, if we want to remain a place with good jobs and bright prospects, we need to start growing again, and fast.

Evan Horowitz digs through data to find information that illuminates the policy issues facing Massachusetts and the US. He can be reached at Follow him on Twitter @GlobeHorowitz.