The economic outlook for Massachusetts and Oregon is raising concerns among economists. In Massachusetts, economists believe that the state's economy, along with the national economy, likely reached its peak in the second half of 2023. Slower growth is now anticipated for 2024, potentially due to the delayed effects of higher interest rates. Recent data revisions by the U.S. Bureau of Labor Statistics have essentially erased the 'fairly robust picture of Massachusetts jobs growth' seen in 2023. The MassBenchmarks board has noted a small increase in the number of people who want work but have not actively looked for employment in the last four weeks, which could be an early sign of a weakening economy or an expansion of the available labor pool. The question of whether a recession is on the horizon or if the state and nation are headed for a 'soft landing' phase of slow but stable growth and lower inflation remains. The Massachusetts government is still grappling with understanding the post-pandemic economy, with below-expectation tax revenues recorded for seven consecutive months until March. Economists have advised the administration to expect a soft landing in the current fiscal year and a recovery in the latter half of FY 25 into FY 26 [50f972cf].
In Oregon, the economy continues to grow steadily, with April personal income tax collections higher than expected. There is a 50% chance that Oregonians will receive a $582 million kicker tax credit in 2026. However, state economists warn that the additional tax collections and refunds might not happen due to uncertainty with the national economy. Factors such as high interest rates, federal policy woes, and economic weakness among trading partners could derail the expected growth. State economist Mark McMullen also cites continued high inflation and the Federal Reserve's indication that it won't cut interest rates until December, increasing the likelihood of a recession. The upcoming federal election adds to the uncertainty. Oregonians received record kicker payments this year, but economists note that people are not spending that money. There are still four more forecasts before lawmakers receive the final March 2025 numbers for crafting the next two-year budget. Forecasters estimate the state will have about $34 billion in its general fund, allowing lawmakers more money for emergencies in the current budget cycle. Democrats call for more spending on housing, schools, and behavioral health, while Senate Republican Leader Daniel Bonham calls for reining in state spending [0a7d873f], [8c523117], [92b64bd8], [e26119d1].