A group of regional economists is warning that while unemployment in Massachusetts is at prerecession lows and the state’s economy is growing faster than the nation’s, the state’s long-term outlook “rests on precarious footing” because of uncertainty about the global and national economies.
With economic turbulence around the world and anemic growth in the US economy in the first quarter of 2016, the state will face challenges, the group said in its quarterly assessment of the state’s economy, released Wednesday by the University of Massachusetts.
“It seems likely that the state economy will remain on an even keel in the short run,” members of the Massachusetts Benchmarks editorial board said in their report. “However, the risks of a global slowdown have increased, which could impede the state’s continuing economic expansion if conditions worsen.”
Regional economists are increasingly wary about how much longer the state’s robust economic expansion can last, said Robert Nakosteen, an economics professor at UMass Amherst and the executive editor of MassBenchmarks.
“There’s a sense that our shelf life is coming due here pretty soon,” Nakosteen said.
The global slowdown is likely to cascade down to Massachusetts eventually. For example, as China’s demand for oil, metals, and other raw materials from Canada shrinks, our northern neighbor and one of the state’s key trading partners will probably buy fewer services and products from Massachusetts businesses, Nakosteen said.
“It’s hard to see any cracks in the facade right now,” he said. “I’m predicting that the really strong numbers for the state may not last longer.”
Economists from local universities, business, government, and the Federal Reserve Bank of Boston constitute the editorial board of MassBenchmarks, a UMass economic journal. They meet quarterly, and their discussions about the state’s economy are summarized and published by MassBenchmarks.
The state’s unemployment rate dropped to 4.4 percent in March, well below the national average of 5 percent. The state’s economy also grew at 2.3 percent for the first quarter of this year, much higher than the 0.5 percent nationwide growth.
Massachusetts is reliant on health care, education, technology, and professional services — sectors that have done well in recent years. That has provided the state, especially Boston and its surrounding suburbs, with a buffer in uncertain economic times, the economists said.
But the state’s aging workforce, uneven school system, high housing prices, and aging transportation system could slow its economic expansion, the economists warned.
“These issues cry out for public policy solutions,” the economists said. “Sustaining economic momentum requires that the Commonwealth address conditions over which it has some control — factors that continue to weigh heavily on its long-term economic outlook.”