Clayton-Matthews predicts short-run economic impact from the Boston Lockdown is similar to a snowstorm
What the Boston Lockdown Might Cost
The manhunt for the remaining Boston Marathon bombing suspect has largely shut down the city and its surrounding areas, as authorities asked residents in Boston and a number of nearby neighborhoods to stay indoors.
Boston Logan International Airport remained open and was operating under “heightened security,” according to the Massachusetts Port Authority, but the Massachusetts Bay Transportation Authority suspended all public transportation, and businesses large and small told employees to stay home. Utility National Grid closed its facilities in the affected communities and told employees to work remotely, a spokeswoman said, but its crews in the area will work with local authorities to respond to any emergency situations. Schools including Boston College, Boston University, Harvard University and the Massachusetts Institute of Technology, where authorities said a campus patrol officer was shot and killed by the bombing suspects last night, all cancelled classes.
Not all business activity was shut down. “At the direction of authorities, select Dunkin’ Donuts restaurants in the Boston area are open to take care of needs of law enforcement and first responders,” Karen Raskopf, chief communications officer of Dunkin’ Brands, said in an emailed statement.
The Boston metropolitan area had a GDP of nearly $326 billion in 2011, according to data from the Bureau of Economic Analysis released in February. That makes the city and its surroundings the ninth largest metro area in the U.S., with an economy larger than those of Greece, Finland, Singapore, Portugal or Ireland.
It’s far too early to get a complete sense of the economic impact of Monday’s bombings and the subsequent manhunt, but a simple – or simplistic – calculation based on that $326 billion figure suggests that shutting down the area for a day could cost the regions’ economy about $1 billion. That doesn’t account for productivity lost nationally as workers tune into to TV news or other outlets to follow the unfolding events.
But today’s economic activity isn’t necessarily lost – it might just be delayed, similar to the effects from the blizzard that hit the area in February, says Alan Clayton-Matthews, a professor at Northeastern University who studies the region’s economy. “People on salary haven’t really lost any income,” he says. Restaurant and retail workers might not be getting paid for shifts affected by the shutdown, but they could make up for that in the near future. “The short-run impact is pretty much like a snowstorm,” says Clayton-Matthews, “which is kind of odd given how horrific and surreal this situation is.”
The most significant long-run economic impact, if there is any, may come from increased security costs, both in Boston and nationally, particularly for open-air events. “More resources will need to be put into making events secure,” Clayton-Matthews says, “and that takes away resources from other uses that might have led to higher growth in the future.”
Clayton-Matthews predicts potential for economic losses at outside summer events due to lingering fear from Boston marathon bombings
Economics? Biggest loss is yet to come, experts say
By Jack Minch and Jennifer Swift New Haven Register
The biggest economic impact to Friday’s lockdown of Greater Boston is yet to come, said Northeastern University economist and professor of public policy Alan Clayton-Matthews.
Dunkin’ Donuts shops were the only businesses with permission to open in Watertown, and residents throughout Greater Boston were urged to stay inside, so the region ground to a near-halt Friday.
In Boston the MBTA shut down and Bruins and Red Sox postponed their games.
Restaurants and universities were closed in response to the search for Boston Marathon bombing suspect Dzhokhar Tsarnaev.
It is difficult to tell the value of the economic loss, said Jon Hurst, president of Retailers Association of Massachusetts.
“Certainly it is hundreds of millions including retail, restaurants and lost office productivity,” he said in an email. “Could exceed a billion.”
Jim Fitzgerald, the owner of Fit-Z’s Bar and Grill on Main Street in Watertown, said Friday afternoon his bar is a place for people to hang out, but he planned to remain closed until told otherwise.
“Friday is the busiest day of the week for us,” Fitzgerald said. “My friends have called, different people have texted to see if we’re open. But I’m friends with cops, and they’ve told us it’s not a good idea to congregate.
“Friday’s are a busy day for us; so is the weekend, but it’s not worth the risk. Just in case.”
Most of the money lost to business in the short term can be made up, said Northeastern University economist and professor of public policy Alan Clayton-Matthews.
It isn’t unprecedented for businesses to close on workdays, economists said.
Blizzards forced similar closures during snowstorms this winter, said Clayton-Matthews and UMass Lowell Economics Department Chairman Professor Michael Carter.
“In terms of the effect on business this is similar, but since the weather is nicer I think the rebound effect will be stronger,” Carter said.
Many of the people who work in Boston have salaried positions, and hourly employees will get the opportunity to make up the lost hours for shoppers who delay their spending, Clayton-Matthews said.
Some businesses such as pushcart vendors or convenience stores won’t make up the business.
“That business is just gone,” Clayton-Matthews said.
It will be especially difficult for restaurants that cater to the lunchtime crowd, Carter said.
The bigger impact will be on attendance at outdoor events later this year, where fewer people may go to those events out of fear of the danger posed by being in crowds, Clayton-Matthews said.
“People do seem to want to respond to this by being not afraid and not being afraid to be out, but I still suspect there will be some kind of effect later this summer in public open places,” he said.
Businesses and municipalities are likely to start adding security.
The impact will be worldwide, Clayton-Matthews said.
Runners and spectators at the Virgin London Marathon can expect to see increased security Sunday, he said.
Boom in immigration fuels state population rise; Middlesex, Suffolk counties add most
By Matt Carroll | The Boston Globe | April 08, 2013
Driven by a boom in immigration, the Boston area grew by about 55,000 residents in a recent two-year period, according to new county population estimates by the US Census Bureau.
The population growth in Cambridge’s Middlesex County and Boston’s Suffolk County together accounted for about half the state’s overall growth of about 100,000 new residents between April 2010 and July 2012, the census figures show.
The increase brought the state’s total population to 6,646,144.
Massachusetts’ 1.5 percent growth during the period was less than the nation’s 1.7 rate, but the state is doing well compared with the rest of the region.
“It’s the fastest growing state in the Northeast,” said Susan Strate, population estimates program manager at the UMass Donahue Institute, of the nine-state region, which includes New England, New York, New Jersey, and Pennsylvania.
A large part of the Bay State’s growth was made up of immigrants, said officials who monitor the region’s demographics.
“The big story in Massachusetts in the last 10 years is the increase in the foreign-born population,” said Len Albright, an assistant professor of sociology and public policy at Northeastern University. Without immigrants, the state’s population would have fallen over the past decade, he said.
Boston’s population in 1990 was about 20 percent foreign born; now it is 27 percent, according to the census numbers.
Most of Massachusetts’ recent immigrants came from Latin America and Asia, with Brazil, China, and the Dominican Republic topping the list, according to a report released last month by the Immigrant Learning Center, a nonprofit that runs classes for immigrants and does research.
The kinds of jobs the immigrants took varied widely, as did their incomes, said the report’s authors, Professor Alan Clayton-Mathews of Northeastern University and Professor Paul Watanabe, director of the Institute of Asian American Studies at UMass Boston.
Many became cleaners and maintenance workers, but others found employment in the life sciences, computers, and math, according to the report, citing the US Census 2009 American Community Survey.
More than half the state’s medical scientists are foreign born, said Marcia Hohn, at the center. Average income for immigrants is about $40,851, compared with $46,277 for native born, the report said.
“If you are in science and technology, Boston is the place to be,” said Hohn. “There is a lot of energy and knowledge and interacting between the people in the science and technology worlds.”
“This is not your grandfather’s Greater Boston anymore,” said Marc Draisen, executive director of the Metropolitan Area Planning Council, a regional planning agency, referring to the vast number of languages spoken across the region.
More immigrants means a more vibrant economy, said Strate. “Our growth is looking strong,” she said. The state attracts many immigrants because of its reputation for higher education and well-paying jobs in growing fields like biotechnology, said Strate and Hohn.
Metro areas such as Boston have gained population because they are vibrant, exciting places to live and work, said Barry Bluestone, director of the Dukakis Center for Urban and Regional Policy at Northeastern. It’s a trend seen in other thriving urban centers such as New York and San Francisco, said Draisen.
People are attracted to the Boston region because jobs are there, transportation is good, and there are plenty of cultural attractions and good restaurants, said people who follow the data.
Younger people “are more likely to move to Waltham and Somerville and not Lexington and Concord,” said Bluestone. “The younger generation has less interest in a suburban home and definitely less interest in driving an hour to work. They are more interested in living near work.”
Mark Melnik, deputy director of research for the Boston Redevelopment Authority, said Boston is growing younger — more than one-third of residents are between ages 20 and 34. That’s tops among major US cities, he said, and the percent has grown steadily since 1990.
A major factor benefiting the region is the vast number of institutions of higher education, which have helped it constantly reinvent itself, said Ryan D. Enos, an assistant professor of government at Harvard University. When companies built around manufacturing and computer hardware died off through the decades, health care and other industries have sprung up to replace them.
The census numbers showed that Middlesex easily retained its title as the state’s most populous county, with an estimated population of 1,537,215. Suffolk, the fourth largest county behind Worcester and Essex, grew to 744,426.
Middlesex County also benefits from the growth of Boston, said Albright, as people move there who either cannot afford the city or who work nearby but don’t want to live in the city.
On a percentage basis, Suffolk grew the most, 3.1 percent, tied with tiny Dukes County, made up of Martha’s Vineyard and the Elizabeth Islands, which added about 500 residents, bringing its population up to 17,041.
Only two counties lost population: Barnstable and Berkshire, which shed about 465 and 1,200 people, respectively.
One thing is not a big draw to Massachusetts: “The weather,” said Hohn. “I’ve never heard any immigrant say, I came here for the weather.”
Matt Carroll can be reached at email@example.com. Follow him on Twitter @globemattc
By Priyanka Dayal McCluskey | Worcester Telegram & Gazette | February 24, 2013
For more than two years starting in early 2010, the Massachusetts unemployment rate fell steadily, indicating that the economy was improving after a severe recession.
But recently, the trend has reversed. After falling to 6 percent in May and June of 2012, the unemployment rate ended the year at 6.7 percent.
In the Worcester metropolitan area, unemployment fell to 6.4 percent in April and May but rose to 7.2 percent by year’s end.
The reversal may be unwelcome, but it’s not entirely surprising, given the slowdown in economic growth during the second half of 2012, according to Northeastern University economist Alan Clayton-Matthews. The Massachusetts economy grew just 1 percent in the last quarter of 2012, Mr. Clayton-Matthews reported in the journal MassBenchmarks.
“There were actually net job losses in the second half of the year, and that was happening at the same time as an increase in the workforce,” he said in an interview.
Robert A. Nakosteen, professor at the Isenberg School of Management at the University of Massachusetts at Amherst, said the unemployment rate can rise when more people become enthusiastic about finding work and decide to join the labor force. State figures show the labor force grew slightly but stayed around 5.3 million last year.
“Things didn’t necessarily get worse,” he said of last year’s unemployment numbers, “they just didn’t get better.”
Still, Mr. Nakosteen said the increasing unemployment rate shows that one of the state’s sources of economic recovery — technology spending — is fading.
“The big spending surge sort of petered out,” he said.
Economists are also concerned about the looming federal budget cuts, known as the sequester, which are scheduled to take effect in March. Those cuts would affect defense contractors, research institutions and others. Sequestration, if it happens, could increase unemployment and slow economic growth.
Defense contractors have already stopped hiring and started “preventive layoffs” in anticipation of the cuts, Mr. Nakosteen said.
While unemployment seems to be increasing, the state’s Executive Office of Labor and Workforce Development said Massachusetts netted at least 52,700 jobs last year, including more than 800 in the Worcester area.
“We remain confident that our investments in education, innovation and infrastructure have led the way for our economic recovery and that the Commonwealth is recovering stronger and faster than the rest of the nation,” Kevin Franck, a spokesman for the office, said by email.
The unemployment rate is calculated from a monthly survey of households. Job estimates are based on a separate monthly survey of employers. Because they’re based on different surveys, the figures don’t always match.
But Andre Mayer, senior vice president for communications and research for the employer group Associated Industries of Massachusetts, is puzzled by the recent numbers.
“This is a different pattern than we’ve seen in past recoveries,” he said. “There’s considerable mystery about what’s happening here. There’s actually been quite a lot of evidence of more people working, but for some reason it’s not showing up consistently in the numbers.”
During 2012, the biggest job gains in Massachusetts occurred in professional, scientific and business services, and trade, transportation and utilities.
But layoffs have not stopped. At least 500 people have been coming through the doors of the Workforce Central Career Center in Worcester each week to apply for or sort out issues relating to unemployment benefits.
Recently, the center has seen many of the workers let go from the Henry Lee Willis Community Center and UMass Memorial Health Care in Worcester, and Ameridose LLC in Westboro.
“We see a constant flow of folks who have been laid off from businesses of a variety of sizes and profiles,” said Donald H. Anderson, director of the career center.
By Robert Gavin | The Boston Globe | January 30, 2013
No one is calling it a return to boom times, but the state’s economy grew modestly in the final three months of 2012, even as the US economy unexpectedly contracted slightly, the University of Massachusetts reported Wednesday.
The contrast offered further evidence the state is rebounding from the recession at a more robust pace than the nation as a whole, largely on the strength of its technology industries.
“This appears to be a slow quarter, but the Massachusetts economy is growing still,” said Alan Clayton-Matthews, a Northeastern University economist and author of the report. “And growth is going to pick up.”
The state’s economy grew at a 1 percent annual rate in the fourth quarter, while the Commerce Department said the US economy shrunk at an annual rate of one-tenth of a percent, largely because of a pullback in government spending.
Over all of 2012, the Massachusetts economy grew 2.1 percent, compared with 1.5 percent nationally, according to UMass. The state also put people back to work at a faster rate — employment grew by 1.6 percent last year, compared with 1.4 percent nationally. Those figures could change, however, as revisions to the data are made in coming weeks by statistical agencies.
The state growth rates were reported in MassBenchmarks, an economic journal published by UMass and the Federal Reserve Bank of Boston. The decline in US economic growth was the first contraction since the first half of 2009, according to the Commerce Department.
The report put a damper on the recent rally in US stocks, which retreated from five-year highs. The Dow Jones industrial average fell 44 points, or 0.32 percent, to 13,910.42, while the broader Standard & Poor’s 500 index fell 5.88 points, or 0.39 percent, to 1,501.96. The technology heavy Nasdaq lost 11.35 points, or 0.36 percent, to close at 3,142.31.
Economists said the contraction was not the harbinger of another US recession. But Federal Reserve policy makers, meeting in Washington on Wednesday, acknowledged in a statement that the economy had slowed in recent months as a result of Hurricane Sandy and other temporary factors. The Fed said it would maintain its policies to stimulate the economy and keep long- and short-term interest rates low.
Still, the decline surprised many analysts, who had forecast that the national economy grew at the end of last year, albeit weakly. Uncertainty about whether Congress would avoid a scheduled combination of tax increases and deep spending cuts — and potential recession — may have contributed to the contraction, economists said.
Overall government spending in the fourth quarter fell at an annual rate of nearly 7 percent; defense spending plunged at a rate of more than 20 percent as the Pentagon braced for possible budget cuts, analysts said. Businesses may also have cut inventories because of the political and economic uncertainty, analysts said, another factor in the contraction.
Congress reached an eleventh-hour fiscal cliff compromise that settled tax questions but put off spending issues for a few months.
Michael Goodman, a professor of public policy at UMass Dartmouth, said the surprise contraction underscores the impact that political gamesmanship and gridlock in Washington can have on the economy.
“The economic data that’s been coming out as of late reinforces the idea that policy choices matter,” he said. “Our inability to come to an agreement at the national level about how much money we’re going to spend, and when, has consequences. We can’t pin the whole thing on that, but those choices matter.”
Economists noted that activity in the private sector expanded. Consumer spending accelerated to a 2.2 percent annual rate in the fourth quarter, from 1.6 percent in the third quarter. Spending on housing jumped at an annual rate of more than 15 percent.
Business investment rebounded, too. Spending by businesses on software and equipment, for instance, surged at annual rate of more than 12 percent in the fourth quarter after falling at a rate of nearly 3 percent in the third quarter.
“That’s a pretty good story in the private sector,” said Brian Bethune, an economics professor at Gordon College in Wenham
Business investment is particularly important to Massachusetts, which has a high concentration of companies that sell goods and services, particularly technology products, to other companies. Even as consumers rebounded slowly from the last recession, business spending has come back solidly, fueling the state’s recovery.
The UMass report projects that the state’s recovery will pick up speed over the next several months, expanding at a 3.6 percent annual rate.
But Clayton-Matthews warned that there are still reasons to be cautious about the outlook. For example, he said, wage and salary income declined somewhat in the last three months of the year, while consumer spending grew slowly.