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The Bay State’s economic expansion peaked in December 2000, when the MassBenchmarks Current Economic Index, which is a proxy for gross state product, reached 150.2. But even before reaching that peak, warning signs were on the horizon. The MassBenchmarks Leading Economic Index, which forecasts changes in gross state product six months hence, turned negative in November 2000 and, except for one month, stayed negative for a year. The Current Index did not rise again until April 2003 and since then has risen at a stubbornly slow pace. While there have been eight successive quarters of growth in the Current Index, the pace of that growth appears to have slowed from last year. In sum, the state of the state economy is a bit like an economist’s version of Groundhog Day, with three fundamental themes driving a repeating story line. Here are the three underlying plot points of that story.


Published in MassBenchmarks, Vol. 7, No. 4, pp. 4-9:


University of Massachusetts



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