A large, lively crowd of local business and political leaders filled the Needham Sheraton ballroom on Wednesday, May 14, to hear Dr. Mary Burke, the Principal Economist and Policy Advisor at the Federal Reserve Bank of Boston; Ashley Stolba, the Commonwealth’s Interim Secretary of Economic Development; and Yvonne Hao, former Secretary of Economic Development speak at the Charles River Regional Chamber’s annual Spring Business Breakfast.
Greg Reibman, Chamber President, in welcoming the guests, observed that it was a “really hard time” to be in public service. The speakers who followed him all noted that these are challenging times for the economy, too.
Dr. Burke accompanied her remarks with a series of slides to explain the changing and unpredictable aspects of the Massachusetts economy and “policy uncertainty.” The slides illustrated the pattern of payroll jobs in Massachusetts, New England, and the United States. Dr. Burke noted that the number of jobs has been flat since the end of 2023. Education and Health Services have been the two stronger areas of job growth in Massachusetts since the pandemic. Jobs in Education and Health Services have been supporting the Commonwealth’s economy, whereas Professional, Scientific and Technical Services jobs have been down since 2022 and Life Sciences is in decline. The overall unemployment rate has been about 1% since 2023.
Overall, Massachusetts has been losing about 15,000 or more residents annually, as the cost of living rises in Massachusetts. Although the Consumer Price Index has decreased in Boston and New England in recent months, it’s still higher in New England than in the United States. And the cost of education, housing, and medical care prices are elevating inflation. Future expectations “have plummeted” since November, producing more pessimism about the economy. Moreover, the Federal Open Market Committee (FOMC) of the Federal Reserve has revised that growth downward while inflation was revised up in March. The economy could be “a wild ride,” Dr. Burke said. With a lower GDP this year, risks of recession increase. Dr. Burke reported that both Goldman Sachs and JP Morgan upgraded the likelihood of recession and slower growth.
Adding to the uncertainty, the risk of higher inflation means interest rates need to be higher while a risk of slower growth requires cutting the rate. For Massachusetts, the negative economic factors include an older population coupled with the outmigration of the labor force and the reduction in tourism, especially from Canada. The massive cuts in NIH funding may drain an additional $2 billion from the Commonwealth. Federal job cuts have increased unemployment rates, and the cuts in research funding will have a long-term impact on Massachusetts that neither the private sector or the state can replace. Since people are feeling “antsy” about the economy they are “less likely to open their pocket books for donations.” Responding to a question, Dr. Burke noted that people did not want to go back to office jobs. But hiring in health care and education jobs has improved.
Bob Rivers, Executive Chair and Chair of the Board of Eastern Bank, the lead sponsor of the breakfast, noted that small, independent institutions of higher education were suffering. He said that 75% of the mortgages in the country are at 4% or lower, thereby reducing turnover, and the office market in Boston is significantly devalued since Covid. “This is a time of great uncertainty,” but it is a time for investment in nonprofits, which are losing federal funding. And it’s an excellent opportunity for volunteerism. As nonprofits face cuts, “we need to put our arms around them.”
Mr. Rivers had the highest praise for former Economic Development Secretary Yvonne Hao. He credited her with bringing people together across multiple sectors and promoting $5 billion for the Affordable Homes Act and $3 billion for emerging industries. Echoing Greg Reibman, he emphasized the challenges Secretary Hao found in her Commonwealth job, when she left her high-power, private sector jobs to work for much less money and longer hours in the public sector.
The current Acting Secretary, Ashley Stolba, described these as “very chaotic times” in a very unpredictable economy, but declared that we are lucky to live here with “the best public schools, the best place to raise a family, the best place to be a mom.” She wanted small businesses to know there is a program to help them navigate state programs.
In describing her love of Massachusetts, Secretary Hao explained that she was the first person in her family born in the United States and she is so proud to be an American. She described working for the Commonwealth as “a privilege and a gift.” When she accepted the Secretariat two years ago, she was determined to do the job “1000%” for the Commonwealth’s 7.1 million people.
Describing Massachusetts data as “sobering,” the Secretary noted that “we are the most expensive in many ways” and there needs to be “more housing and childcare.” While Massachusetts has the highest income per capita, and other states are cheaper, if you want good education and health care you will pay for them. “If you want cheap, you can move to another state.” “We’re in it for the long haul — and we’ve been doing this for 250 years. This is the time to step up.” She emphasized the $4 billion Mass Leads Act investment in climate tech, life sciences, and AI and workforce development throughout the Commonwealth.
Darryl Settles, a Newton resident and managing partner in two real estate and development ventures, noted from the audience that no one had mentioned the proposed $33 billion cuts to HUD programs, including Section 8 and 40% of affordable housing. “What can we do? It’s really going to hurt our labor pool,” he said. Secretary Hao replied that one party owns the Presidency, the Congress, and the Supreme Court. “We’ve lost $9 trillion in the last two months — such volatility.” No amount of state funding, regardless of how well managed, “can fill that gap. …Some of the cuts are destroying the fabric of what makes this country great,” she said.
Angela Pitter, Chair of the Charles River Chamber Board, a Newton resident, and CEO of Live Wire Collaborative, asked about AI support in the Commonwealth. Secretary Hao assured her that AI “came up in every conversation. We should embrace it and make people’s lives better.” Secretary Hao offered three ways to make people’s lives better:
- Values and equity
- Helping by investing in infrastructure
- Invest in start-ups in innovation and life sciences
In expanding on the concerns he expressed at the Business Breakfast, Mr. Settles later told Fig City News, “Now is the time to manage and save. Yvonne Hao didn’t sugar coat that things are going to get worse. We are back decades for Blacks and immigrants, with attacks on DEI.” He offered as an example the attack on Harvard’s affirmative action admissions policy.
See NewTV’s video of the Chamber’s Business Breakfast.
