Low Unemployment, Strength of Stock Market Contributes to Strongest Quarter of 2019 for Worcester Economy

Worcester Economic Index up 2.0 percent in Fourth Quarter

The greater Worcester economy increased at a 2.0 percent annualized rate during the fourth quarter of 2019 according to the latest update of the Worcester Economic Index (WEI).  The WEI, which is included in the Worcester Economic Indicators report released each quarter by Assumption University Professor of Economics Thomas White, Ph.D., is an estimate of local economic activity based on recent Worcester area employment and unemployment data. The 2.0 percent increase was the strongest quarter of 2019.  

“During the first three quarters of 2019, the local employment numbers were down slightly from the start of the year, but a strong fourth quarter has allowed the Worcester area to experience a modest net gain in jobs over 2019,” said Prof. White. 
In addition to updating the WEI, each issue of Worcester Economic Indicators provides a six-month forecast for the WEI based on four national leading indicators, recent WEI estimates, as well as its long-run trend.  According to the December 2019 forecast, the WEI is expected to grow at a 1.2 percent annualized rate over the next two quarters.

“The modest growth forecast is due to the mixed signals provided by the leading indicators,” said Prof. White. “The continued strength of the stock market, and the availability of credit favor an increase in growth, but the interest rate spread, and, to a lesser extent, consumer expectations, are restraining the growth forecast.”  

The report also discusses two local leading indicators; fourth-quarter new business incorporations in the greater Worcester area fell about 5.4 percent since the fourth quarter of 2018, while state-wide initial unemployment claims increased 1.6 percent from a year ago, both of which are negative signals.  According to Prof. White, “after several years during which both of these indicators provided consistently positive signals, it is too early to claim a turning point. However, the fact that both are now providing small negative signals is something to keep an eye on.”   

The next Worcester Economic Indicators report will be issued in May 2020. The full report is available here.