Last week there was bad news for Massachustts. While the national GDP for the third quarter was reported to have surged 3.5%, the Massachusetts GDP dived 1.1 %. The governor announced new state employee layoffs would be in the thousands.

At the same time in the Massachusetts enclave of Chatham, free of the worries of the national and state economies, the selectmen are discussing where they will get the money for fiscal 2011 (beginning next July 1) to pay for union pay raises such as the 8% built into the school union contract. And whether or not they should offer a cost-of-living increase when price increases have been non-existent for the past year, with the consumer indexes falling below zero! Social Security recipients aren't getting a cost-of-living increase, but Chatham public employees might.

The fat schools union contract is just a touch richer than the fire union contract negotiated by town officials and approved by the selectmen last October - December as the economy was in free fall. Under that contract fire department employees are enjoying 7% increases during the current fiscal year.

Already, almost all Chatham full time employees receive more in compensation than the incomes that half the households in Chatham have to live on.

For fiscal 2010, the selectmen asked the unions to consider reopening their contracts to negotiate reduced increases. As soon as one union said no (the fire union), that cost-saving idea was discarded and the spending plan went through granting all public employees an average increase of 6% - as well as increases in pension and health care benefits.

A similar request has been made to the unions about fiscal 2011. Based on past experience, one cannot be optimisitic that the public unions will take the economic condition of taxpayers into consideration.

Massachusetts downturn deepens

U.S. economy heads up as state’s falls further

By Jay Fitzgerald | Friday, October 30, 2009

Massachusetts may be mired in a recession through the end of the year, even as the nation’s economy tentatively pulls out of the worst downturn in decades, according to reports released yesterday.

On the same day Gov. Deval Patrick announced major layoffs in state government, the University of Massachusetts reported that the state’s economy shrank by about 1.1 percent in the third quarter - as indicated by increasing corporate layoffs and plunging tax revenues.

“We’re at the bottom and we might bounce around there for a while,” said Michael Goodman, co-editor of the report and chairman of UMass-Dartmouth’s department of public policy.

Meanwhile, consumer confidence in Massachusetts has dipped for the first time in two quarters amid fears of economic hardships ahead, Mass Insight reported yesterday in a separate report.

“Some people are concerned that next year is a big black hole,” said William Guenther, president of the Boston research organization.

The gloomy Massachusetts news was in stark contrast to a national report yesterday that the U.S. economy grew by 3.5 percent in the third quarter, unofficially ending the nation’s longest downturn since the Great Depression.

Economists warned that the federal government’s stimulus spending may mask the true picture of the nation’s economy. The government’s “cash for clunkers” auto program and the $8,000 tax credit for first-time home buyers helped the economy earlier this year, they said.

But the “cash for clunkers” program is now over, while the fate of the tax credit is up in the air.

Goodman said the U.S. economy, as a result, may not be much better off than the Massachusetts economy.

The UMass study estimated that the state’s economy will be “flat” through the end of this year - and probably won’t start growing until early next year.

Alan Clayton-Matthews, a Northeastern University economist and co-editor of yesterday’s economic report, said the state’s technology sector is slowly expanding in reaction to the tentative national growth, so it could boost Massachusetts in coming months.

But he said he’s still concerned about the national economy - and the risk of a “double dip recession” in the near future.

Some observers, including Patrick, have touted the possibility that the state’s economy might emerge as a leader in any recovery. But those hopes seemed to be dashed by yesterday’s economic data.