The overall economic growth of New England in 2016 mirrored that of the U.S., according to a presentation by the New England Economic Partnership (NEEP) at its annual Economic Outlook Conference, held yesterday at the Federal Reserve Bank of Boston.
NEEP’s team of economists predicts 2017 and 2018 to remain strong, followed by a likely decline as the decade comes to a close.
The final years of the decade will be marked by uncertainty on the national level due to an unorthodox incoming administration, NEEP Vice President Ross Gittell noted. He expressed optimism for potential benefits in the way of infrastructure investments and tax reforms.
The economic strength of the region is most evident in top performers New Hampshire and Massachusetts, which boast the first and third lowest unemployment rates in the nation, respectively, according to NEEP data.
The gross regional product of New England peaked in 2015 at 2.8 percent and declined to 1.6 percent in 2016. The forecast shows that measure jumping back up to 2.7 percent throughout 2017 and 2018.
Massachusetts NEEP representative Alan Clayton-Matthews of Northeastern University elaborated on potential impacts of the Trump administration on the state.
“The impact on Massachusetts for the most part is going to mirror the impact on the national economy,” he said. “The fiscal stimulus and corporate tax reform in particular could boost spending in [Massachusetts], including investment spending by businesses … as well as military spending.”
The biggest upcoming concern, Clayton-Matthews said, is changes in health policy on the national level.
“We were expecting about $29 billion in federal aid over the next five years under Obamacare, so we’re uncertain of how much of that will remain available,” he said, adding that state’s will need to develop contingency plans for social service programs if federal funding dwindles.
Addressing another cornerstone of Trump’s campaign, Clayton-Matthews said, “We’re highly dependent on growing our labor force by net foreign immigration, so anything that slows that could hurt our economy.”
Clayton-Matthews illustrated “demographic challenges” that will drag down employment growth more than one percent over the next four years – primarily related to labor force age. As Baby Boomers grow older, the forecast shows percent growth of the labor force dropping below that of the total population next year, for the first time since 2013. Although net migration of younger Millennials into the state is positive, it remains negative for those in their 30s or older.
Remaining job growth is expected to be concentrated largely in construction, business services, education/health services and hospitality. Manufacturing and mining is the only sector expected to lose jobs.
