Good News: Worcester Economy on the Rebound

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Friday, May 13, 2016

GoLocalWorcester News Team

The Worcester Economic Index shows that the economy in the area has rebounded as is expected to grow for the next six months.

According to the Worcester Economic Index (WEI), a quarterly economic analysis created by Assumption College Professor Thomas White, “the Worcester-area economy showed signs of progress in the first quarter of 2016 as compared to the fourth quarter of 2015.”

“After a sluggish finish to 2015, the Worcester economy experienced stronger growth in the first quarter of 2016,” said White. “Looking forward, the WEI is expected to continue near the rate experienced in the first quarter of the year. Favorable financial market conditions as well as a uptick in the WEI in recent months helped to boost the forecast slightly above the long-term trend.”

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The WEI is estimated using Bureau of Labor Statistics data on employment and unemployment for the Worcester metropolitan area, each of which moved in a promising direction during the first three months of the year.

The WEI is expected to continue to grow at a modest rate in the near future. The forecast predicts growth of about 1.8 percent over the next six months. The WEI forecast relies on four national leading indicators: consumer expectations, S&P 500 stock index, interest rate spread, and the Leading Credit IndexTM as well as past values of the WEI.

According to the report, "two of the three local leading indicators tracked in the WEI reports are currently providing positive signals.  Massachusetts initial unemployment claims are down while the number of new business incorporations in the Worcester area have risen over the past year.  However, online help-wanted advertisements are down over 21 percent compared to the first quarter of 2015, so not all the news is favorable."

“Most of the leading indicators are providing positive signals, however the falloff in online help-wanted ads is something to keep an eye on,” added Prof. White. “In addition, last week it was announced that US GDP grew at only 0.5% during the first quarter.  So while it is unlikely the economy will slip into a recession there is also little chance that it accelerates much during the remainder of the year.”

This quarter’s report includes a short supplement that explores the relationship between housing permit applications and employment in the construction industry.

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