The technology sector that hurt Massachusetts’ economy the last time recession hit is helping the state ride out the current slump in better shape than the nation as a whole.
The recession that took hold in 2001 after Internet startup firms began collapsing in droves cut deeper and persisted longer in Massachusetts than nationwide in part because of the state’s dependence on technology jobs, which are usually more prone to boom-and-bust cycles than the broader economy.
But as the nation’s economy threatens to fall into recession again, the triggers this time aren’t Internet firms, but a housing slump, a credit crisis and rising gas prices. Those problems have done relatively little damage to areas of the economy where Massachusetts is strongest, economists say.
Despite job losses in retail and construction, Massachusetts has so far managed to avoid deep troubles because of its clout in fields such as computer software and medical technology, combined with the state’s strength in health care and higher education — sectors that tend to stay insulated from economic turmoil. Meanwhile, the state’s exports to foreign customers have remained robust.
“It’s our industry mix in Massachusetts that’s helping us,” said Alan Clayton-Matthews, a public policy professor at the University of Massachusetts’ McCormack Graduate School of Policy Studies. “We have a lot smaller proportion of our workforce involved in the sectors that aren’t doing well — housing construction and auto manufacturing, for example — and we’ve got a high proportion in sectors that are doing well.”
Gross product — the value of products and services, and the broadest measure of economic performance — rose about 2.9 percent in this year’s first three months in Massachusetts, compared with just 0.6 percent growth for the nation as a whole, Clayton-Matthews said.
The Bay State’s unemployment rate has remained below the nation’s jobless figure since June 2007 and fell to 4.1 percent in April, compared with 5 percent for the nation. Massachusetts’ unemployment rate is the lowest since September 2001 and down from a high of 5.9 percent in mid-2003. Meanwhile, the state has posted job gains in six of the past seven months.
The weakness of the U.S. dollar relative to other currencies — a symptom of the nation’s economic troubles — also is providing an opportunity for states like Massachusetts that rely heavily on overseas customers. The dollar’s weakness makes U.S. goods less expensive for foreign buyers, which has boosted sales of everything from data storage products made by Hopkinton-based EMC Corp. to drugs from Cambridge-based Genzyme Corp.
Evidence of Genzyme’s insulation from the economic downturn is visible at three Boston-area sites where the biotechnology company is constructing new manufacturing and research facilities.(p2)
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