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Massachusetts economy surged in second quarter

The Massachusetts economy made a big comeback in the second quarter of 2017 with the most striking increase coming in the income to local workers. Steven Senne/Associated Press

The Massachusetts economy made a big comeback in the second quarter of 2017 after a disappointing start to the year.

The state’s gross domestic product grew by 4 percent, compared to the national average of 2.6 percent over the same period, according to MassBenchmarks, a local economic service administered by the UMass Donahue Institute.

The group also revised upward its estimate of the state’s first-quarter economic performance. After initially reporting that economic activity had declined in the first quarter, it now says the state experienced 1.1 percent growth.

The Mass. numbers approach the 4 percent national growth that President Trump is aiming for over the next few years.


The trend in Massachusetts is in line with swings in economic activity in recent years, said Alan Clayton-Matthews, an economics professor at Northeastern University and senior contributing editor at MassBenchmarks.

“Economists are getting to the point where they are almost expecting low growth rates in the first quarter,” he said, adding that this is usually followed by a stronger second quarter.

Most striking was an increase in income. MassBenchmarks estimated wages and salaries increased by a whopping 24 percent, on an annual basis, a huge increase from the 3.7 percent growth recorded in the first quarter. Nationally, wages and salaries increased by 3.7 percent during the second quarter.

The number is based on state withholding taxes, which may not accurately reflect the increase in income, Clayton-Matthews said. Nonetheless, wages have gone up significantly, he said.

One possible explanation he said, could be that some businesses delayed giving bonuses until the second quarter, hoping for lower tax rates favored by the Trump administration and the Republican Congress.

Another possibility is that company buyouts inflated the income number. But “it would take a huge, huge wage and salary buyout to explain this growth,” Clayton-Matthews said.


Still, not every Massachusetts worker has seen a wage spike. UMass Boston economics professor Randy Albelda pointed out that the numbers don’t show how salary increases are distributed.

“We don’t know if it’s [that] the top 10 percent got more income, or if it’s shared across the population,” she said.

Meanwhile, the unemployment rate that includes residents who are working part time but want full-time work, and those who want work but haven’t sought it in the last four weeks, increased from 7.5 to 7.8 percent from December to June because more people are trying to rejoin the workforce.

Lauren Feiner can be reached at lauren.feiner@globe.com.