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The economy in Massachusetts shrank over the summer despite continuing to grow nationally, as the tightest labor market since the dot-com boom of 1999-2000 left local businesses struggling to fill jobs, according to a report Wednesday.

The latest quarterly MassBenchmarks analysis said the state’s output of goods and services contracted 0.2 percent from July through September. While cautioning that the dip doesn’t mean a recession is imminent, the report highlights the downside of the state’s low jobless rate, which stood at 2.9 percent in September, compared with 3.5 percent for the United States.

The state’s economy lost ground in the first and fourth quarters of 2016 but avoided a recession, according to MassBenchmarks, which is a collaboration between the University of Massachusetts Donahue Institute and the Federal Reserve Bank of Boston.

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The state data also can fluctuate, making it hard to define a trend from one quarter.

The most common complaint of Massachusetts businesses is that they can’t find enough workers. That has hindered expansion while pushing up wages.

“What we are seeing is the impact of a labor force that is aging and that is older than the national average,” said Robert Nakosteen, an economics professor at the Isenberg School of Management at UMass Amherst and executive editor of MassBenchmarks.

In Massachusetts, he said, “there are more people retiring and fewer younger people entering the workforce.”

The MassBenchmark report was released the same day the Commerce Department said the national economy expanded at an annualized rate of 1.9 percent over the prior three months, as healthy consumer spending and a pickup in the housing market offset the second consecutive quarterly decline in business spending.

Also Wednesday, the Federal Reserve, as widely expected, cut interest rates for the third time since July but signaled that any additional reductions were on hold.

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While the US economy is shifting into a lower gear — gross domestic product increased 3.1 percent in the first quarter and 2 percent in the second quarter — conditions seem to have improved since hitting a low point in August amid slowdowns in China and Europe. Since then, concerns about the US-China trade war and Brexit have eased, and a convergence of short-term and long-term government bond yields — considered a reliable recession warning — has reversed.

“Job gains have been solid, on average, in recent months, and the unemployment rate has remained low,” the Fed said in the statement announcing its quarter-percentage-point cut, which lowered the target range for its benchmark federal funds rate to 1.5 percent to 1.75 percent.

Fed chairman Jerome Powell said at a news conference that this year’s rate cuts “are providing and will continue to provide meaningful support to the economy.”

Powell also made it clear that the Fed was done cutting rates for a while. “We believe monetary policy is in a good place,” he said. “We see the current stance of policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook.”

The Fed expects growth of about 2 percent next year, about the same as private forecasters, with inflation moving up closer to its target, also 2 percent.

After the Fed increased rates in December — considered unnecessary by many — Powell spent most of this year vowing to support the economy. His refrain — that the Fed “will act as appropriate to sustain the expansion” — was taken by financial markets to mean that officials would err on the side of easing credit even if conditions didn’t overtly warrant it.

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Investors said Powell did a good job on Wednesday backing himself out of the rate-cut corner. The Fed statement dropped the “act as appropriate” phrase, instead saying officials would track economic data as it “assesses the appropriate path of the target range for the federal funds rate.”

Peter Cramer, a senior portfolio manager at SLC Management, said the Fed wants to see how the economy fares without further easing of credit.

“It’s like teaching a kid to ride a bike,” he said. After taking away the training wheels of lower rates, “Powell’s intention now is to see whether the economy is ready to find its own footing.”

The Standard & Poor’s 500 hit a record high after the Fed’s rate decision, which came on an 8-2 vote, with the president of the Boston Fed, Eric Rosengren, and his counterpart at the Kansas City Fed opposing a rate reduction for the third straight vote.

The S&P 500 gained nearly 10 points, or 0.3 percent, to 3,046.77. The Dow Jones industrial average rose 115 points, or 0.4 percent, to 27,186.69, but remains slightly off its peak. The yield on the 10-year Treasury dipped to 1.78 percent from 1.84 percent, as the price rose.

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Shannon Saccocia, chief investment officer of Boston Private, a wealth-management firm, said she is bullish on stocks for the rest of this year, as corporate earnings hold their own and “there just isn’t an alternative for investors.”

But she said things could change in 2020 as the presidential campaign heats up.

“Election years are traditionally pretty bumpy for equity markets,” she said.

As for bond investors, the Fed’s decision to pause could mean some price declines, according to Bruce Monrad, a portfolio manager at Northeast Investors. “The market is still pricing in some rate cuts, and that may need to come off the table,” he said.

Most forecasters don’t see a recession until at least 2021, as long as consumer spending holds up. And while that should help Massachusetts, what the state really needs are more workers.

Nakosteen, of UMass, noted growth is driven by expanding the ranks of the employed and increasing productivity. “Right now, neither of them is growing very much,” he said.

Correction: An earlier version of this story inaccurately described the economic significance of of a convergence of short-term and long-term interest rates. It also misstated the affiliation of MassBenchmarks.


You can reach me at larry.edelman@globe.com and follow me on Twitter @GlobeNewsEd.