Economic Forecast Massachusetts 2023December 7, 2022 8:32 am
While it would be wonderful to be able to read a crystal ball and see what the future holds for the Massachusetts economy in 2023, it’s comforting to know that many areas of our economy are recovering well and rebounding after a few years of turmoil despite rising inflation.
Over the past few months, Massachusetts officials have released budgets and benchmarks for our economy in 2023. Let’s take a closer look at what experts forecast for the coming year.
What The Numbers Tell Us
Secretary of Administration and Finance Michael Heffernan explains that “Massachusetts’ fiscal year 2023 budget will maintain fiscal discipline while providing necessary funding to protect essential government services and support key priorities throughout the Commonwealth.”
Massachusetts Governor Charlie Baker reported at the mid-year mark that “Massachusetts is poised to collect nearly $37 billion in state tax revenue in the fiscal year 2023.” This projection is slated to include money from the unused American Rescue Plan State Fiscal Recovery fund in order to support the state’s most vulnerable populations disproportionately impacted by the COVID-19 pandemic.
Statistics from the Massachusetts Labor Bureau tell us that unemployment currently sits at 3.5%. The region seems to have recouped the labor losses caused by the pandemic and faces a tightening labor shortage going forward.
According to TD Economic forecasts, “the Bay State economy has ranked close to the regional average for New England in terms of post-pandemic growth. However, the rate of growth has slowed recently as both the current and expected future path of interest rates has risen. Looking forward, we expect that real GDP growth in the state will be 2.7% in 2022 and decelerate to 0.7% in 2023.”
Home prices are another indicator that economists use to take the temperature of the economy. Massachusetts home prices have risen 30% since February 2020, slightly lagging the national gain. It is expected that prices will begin to respond more sharply later this year. Price declines will continue into 2023 before finding a price floor late in the year.
There is good news for the region as the Fiscal Year 2023 budget is in balance, does not rely on one-time revenue sources, and does not raise any new taxes or fees. Instead, it incorporates $315 million to support permanent tax reductions that are expected to be enacted through separate legislation pending in the Legislature.
For more information on Massachusetts’ economy and the FY23 budget, please check out the Mass.gov breakdown online.