NEEDHAM — Statistics and trends shared by an economist from the Federal Reserve Bank in Boston painted a sobering picture for the Boston Metro region, but the former Mass. Secretary of Economic Development gave a pep talk for the attendees of the Charles River Regional Chamber’s Spring Business Breakfast.
Employment has not reached pre-Pandemic levels, some of the regions key areas — life sciences and higher education — have fared poorly or faces challenges, cost of living is high, and opinions about prospects for the future are negative, said Mary Burke, principal Economist and Policy Advisor for the Federal Reserve Bank of Boston.
Also at the Business Breakfast at the Needham Sheraton was Interim Secretary of Economic Development Ashley Stolba, as well as her predecessor, Yvonne Hao. The former Secretary had been the featured speaker when the Chamber announced the breakfast, but stepped down since then. She came to share her thoughts with members of the group that represents Watertown, Newton, Needham, and Wellesley.
Hao likened the economic situation to the playoff prospects of the Boston Celtics. The event took place on May 14, when the C’s faced a 3-1 deficit to the Knicks.
“Now you may not win this season. It may be over for us. You may not win every game, every play, every series, every championship, but we are in this for a long haul,” she said. “We’ve been around for 250 years. We’ve been around for the long haul and you know what we do over the long haul. We put up more banners because we know how to fight, we know how to work, we know what’s at stake. And when the times when you’re down three one, that is when you want to be on Team Massachusetts”
One of the things that kept Hao up when she was secretary was the fact that people were leaving Massachusetts for places like Florida and Texas with lower taxes and costs of living. She said that she believes the Bay State still has much to offer for the price.
“If you want cheap, if you just care about cheap — ‘I just want, like, no taxes. I want everything to be super cheap.’ You can move down to your states,” Hao said. “But I also don’t think you want to drive a Yugo. You want something better.”
Hao added: “We are the most expensive at a lot of things. We are also the wealthiest. We’re the highest income per capita state, and also we’re the highest quality. So when you look at our costs, we are expensive. Where you get way better education, you get way better health care. You get better, you know, everything, drinking water, air quality. You can go to other states that are cheaper. There are many states that are cheaper. You’re not going to have good public schools. You’re not going to have safe streets.”
In some areas, Massachusetts is actually on the lower end of costs, such as health care where it is in the lowest third of states.
The Stats
Burke provided a detailed slideshow to kick off the morning, showing the trends in the Massachusetts economy compared to New England and the nation.
The number of jobs have stalled, or even slowed down, she said. After originally appearing that employment in the Commonwealth had completely recovered from the downturn during COVID-19, Burke said the numbers were adjusted down to 99.3 percent of those pre-Pandemic.
The areas that had growth were health care and higher education, Burke said. Biotech has not fared as well.
“We’re very proud of our biotech and life sciences industry,” she said. “But those jobs peaked in late 2022 and some of the story, people will say as well, they over hired, these firms just ran into hiring freeze after the pandemic. This is really just a correction, but a lot of it is also less investment from venture capital firms.”
Migration out of Massachusetts has been more than 15,000 a year since 2015, and increased to over 50,000 in 2022. In 2024 it was close to 30,000, Burke said.
“We know cost of living is a big factor in this. Notice, this happened before the increase in the marginal tax rate for people earning more than a million dollars,” Burke said. “Some people say that’s playing somewhat of a role. We’re not seeing a big factor there, but it could be a factor for some people.”
Most years the immigration from other countries more than made up for the number of people leaving, but immigration dropped to 0 in 2020. In the last three years Massachusetts had around 80,000 people move in each year, which was above the pre-Pandemic level when it was closer to 40,000 annually.
A bit of good news is inflation, where Boston is about the same as the national rate of 2.3 percent. The inflation rate is also well below the peak in 2022, when it was about 7 percent. New England’s inflation rate, however, is above the national number.
Burke said it is not clear what effect the U.S. tariffs on imports will have on inflation.
“People are saying it’s sort of too soon to say, ‘oh, tariffs aren’t having an effect,’ because the tariffs, they’re not really feeding into these numbers yet. So this might be sort of calm before the storm,” she said.
While consumers express concern about inflation and cost of goods, Burke said retail spending numbers have been “pretty good.”
When asked about the future, consumers have less confidence, Burke said.
“So, the best understanding of this is that there’s just so much uncertainty about the direction of the economy that the outlook for the future feels negative, feels scary,” Burke said. “We don’t know what’s going to happen with tariffs. Is that going to cause inflation? Is it going to hurt economic growth?”
More concerns, Burke said, come from the federal policies impacting Massachusetts.
“Federal policies really pose, I would say, a disproportionate risk in the region. The trade war is already affecting economic activity. In Massachusetts, there’s been way fewer Canadian tourists coming in. They’re canceling their summer bookings on Cape Cod. We rely a lot on tourism, especially from Canada, and it’s already fallen up just from the bad relations spurred by the trade war,” she said. “The cuts to the NIH grants are a very important factor, an engine of local economic growth in Massachusetts, could again drain economic activity in the Massachusetts economy by over $2 billion and some 10s of 1,000s of jobs, potentially. And already, it’s affecting hiring. Already, universities are cutting budgets and freezing hiring because they know they’re going to get less revenue. This is really already having an effect.”
Burke said the Federal Bank Boston is seeking companies and business owners to take part in surveys about the economy to be part of the Beige Book.
“We’re trying to recruit a lot of businesses, because we really want to understand better what’s happening in the new economy, and this does inform monetary policy,” she said. “There’s no payment for your services, but you have the satisfaction of knowing that your voice is heard.”
To apply to be part of the Beige Book click here.
See Mary Burke’s slideshow by clicking here.