Despite tepid growth during the first quarter of 2017, the Massachusetts economy is surging ahead, according to the UMass Donahue Institute. Our state’s revised gross domestic product grew from a modest 1.1% margin during the first quarter, to a robust 4% during the second quarter. Nationwide, gross domestic product is averaging 2.6%.
The big news in the economic data is the double-digit wage growth posted during the second quarter. Massachusetts wages increased by an average of 24%, compared to a national average of 3.7%. Yet during the first quarter, Massachusetts wage increases were in line with national averages, rising just 3.7%. This stark comparison has drawn speculation from analysts. Some believe that the second-quarter salary boost could be due to delayed bonuses and raises, possibly postponed while the country’s economic direction under a new D.C. administration became clear.
What is not known, is if the hike in wages and salaries is shared across a variety of income levels, or if only the upper strata of wage earners are receiving the gains. Executive incentives, bonuses, severance pay and buyouts, spurred by corporate mergers and acquisitions, could also be playing a role.
The latter theory falls into place with the trends we have been seeing in Boston Metro commercial real estate. Office demand softened during the second quarter as companies relocated, right-sized or merged, contributing to tenant attrition and a rise in vacancies.
The creeping rise of unemployment levels further supports this speculation. As of June 2017, Massachusetts unemployment reached 4.3%, rising from a 10-year low of 3.1% in December 2016. Our unemployment rate is currently on par with the national average of 4.3%. However, part of the increase in our unemployment levels could be attributed to seasonal factors, such as college graduates and students seeking to enter the workforce.
Overall, the economies of Massachusetts and the Boston Metro area are likely to enjoy continued growth! Our variety of industry and well-educated workforce provide an abundance of resources for major employers and start-ups alike.
When you are ready to begin, relocate or expand your business in the Boston Metro, team up with the Jay Nuss Realty Group! Whether you are thinking of buying or leasing Boston Metro commercial real estate, we can help you find the ideal property. We will also provide you with professional tenant representation to help you make the best decisions!
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