Economic growth is slowing, and is projected to continue to decelerate into the second half of 2008, and then to rebound moderately. The slowdown is directly related to the impact of the declining housing market, the sub-prime mortgage shakeout in the finance sector, and the high cost of heating oil and gasoline. Credit tightening is threatening to curtail business activity and the solvency of investors and households involved in sub-prime lending or borrowing. High energy prices are reducing non-energy consumer spending. The impact of the declining housing market has already affected the state’s economy. Massachusetts is experiencing declines in housing construction and construction employment, and slower growth in consumer spending.
Clayton-Matthews, Alan, "National Woes Test Bay State Economy" (2008). Public Policy and Public Affairs Faculty Publication Series. 8.
University of Massachusetts Donahue Institute
Published in MassBenchmarks, Vol. 10, No. 1, pp. 4-9: http://www.massbenchmarks.org/publications/issues/vol10i1/3.pdf.