The previous nine months have been tough for the community of Boston due to the pandemic. The COVID-19 pandemic forced the greater Boston area to shut down its operations to restrict human contact. The effects of the pandemic guidelines continued to be felt until mid-January. It is significantly impacted and changed the way we live our lives and our work ethic. However, this year has been new dawn, dawn to a new norm. It has come to promise that the pandemic that severely affected businesses, individuals, and families will end. Two vaccines seem promising this year, and many other vaccines are in the pipeline, going through testing and trial faces. The USA continues to battle this pandemic with the medical staff at the forefront. The medical sector will see relief by injections of these vaccines. The economy is not expected to grow exponentially unless vaccines are allowed to the public. A fast-paced recovery is only possible with long-term and appropriate monetary and fiscal policies.
Present economic conditions continue to be affecting because of the ongoing pandemic. The labor market has halted as infections continue to increase. Simple survival has forced individuals and inhabitants to restrict their movements and stay inside their homes. This has significantly strained the service sector, such as hotels, entertainment venues, and restaurants. These industries may suffer from severe impacts if the new variants of infections become pervasive. Targeted fiscal policies supporting the most vulnerable in the pandemic time would be the appropriate way to manage the halted economy. Many commercial activities have also been postponed because of the pandemic. This includes bank loans and real estate transactions that have come to a cease due to uncertainty in the market.
The continued pandemic has halted a decade worth of progress in Boston. Strict lockdown and shelters were practiced during the spring. Massive layoffs from numerous companies did not help the situation. The unemployment rate at the end of the year-end was a scary 9.5% as the dense populous city of Boston continued to battle other challenges because of the coronavirus. The unemployment due to the pandemic increased gradually. However, the workers returned to their job in the hospitality and industrial sector.
Boston Industries and Economic Areas
The sectors that contribute economic activity to Boston are as follows:
- Finance Sector
- Construction Sector
- Administration Sector
- Public Health Sector
- Entertainment Sector
- Biosciences Sector
- Pharmaceuticals and Storage Facilities
- Transport Sector
Manufacturing sectors will be supported in the future quarters of this financial year. Mostly defense-related businesses such as BAE Systems with a $60 million contract, GlobalFoundries with its $400 million contracts will contribute significantly to the local economy. Maine’s Bath Iron Works also intends to invest $146 million, which will employ 2,500 workers over this year.
Boston Economic Growth Trends Forecast
For the first time in the previous decade, the net absorption was negative in every quarter of 2020. Boston experienced a sudden influx of 2.8 million in sublease space representing 3.8% of the total inventory. Technology and the IT sector continue to be the leaders in the economy, with financial, legal, and professional services in second place. Many companies, whose lease has expired in the Boston area, have shown interest in short-term lease renewals. However, they are delaying long-term decisions because of the uncertainty in market trends resulting from the pandemic. Long-term real estate and lease opportunities are expected to surface in the middle of 2021.
Boston has forecasted an increase in biotechnology ventures. A $6.3 billion investment in sciences was injected into the economy of Boston. This would result in jobs for local people and for aspiring local bio-scientists. This increase in investment has been over five times compared to 2014. The great Boston is, and San Francisco holds more than half of the biotechnology business ventures in the USA. The demand for lap set-up is very high presently in Boston. Boston Properties, a top-tier real estate firm, has mentioned they would be switching to leasing lab spaces and life sciences locations due to the increase in demand. Four central biosciences labs are under construction in the Boston area. This has given rise to submarkets from Fenway and Seaport to create spaces for similar business ventures,
The industrial sector in the Boston area has maintained its footing stepping into 2021. This is because there has only been an increase in demand in the space required for industrial space. Consumer spending dropped sharply in the latter half of the previous year. This sharp decline was off-set by the online shopping trend, which facilitated an increase in demand for warehousing and logistic spaces.
Online business ventures and shopping is expected to continue long after the pandemic is over. The low vacancy in supply has increased the rent expenditure at an expected upward shift of five percent each year. The increase in science ventures has led to a rise in the complimenting and by-product industries of pharmaceuticals manufacturing products and unique security requirements.
Massachusetts Economic Growth Trends Forecast
The shopping in Massachusetts will continue to struggle as social distancing. Large gatherings are restricted as per pandemic guidelines. On the other extreme, businesses such as supermarkets and detached least retail outlets will thrive. At the same time, many restaurants and entertainment venues plan their closure.
The law and policymakers are debating the fiscal budget this year as the Treasury Department plans to sell $1.4 billion in new debt. Credit ratings are being considered to construct the budget while maintaining a positive economic recovery in the future years.
$1.4 bonds are expected to sell in the first quarter of 2021 to increase the credit rating of Massachusetts. This economy is likely to improve once the vaccines are made widespread. Massachusetts’s budget for the previous year was short $700 million. The current year’s tax revenue is also expected to be short of $2 billion than the previous year. The rate of unemployment has been the highest in June last year. It continues to stay below par when compared to the national average.
The government of Massachusetts has proposed withdrawing $1.35 billion from the state relief bund of $3.5 billion to fill the gap of $3.6 billion in the expected tax revenue. However, a withdrawal of $1.5 million from the federal funds is expected to be proposed by the senate and house.
At the beginning of the financial year 2021, the tax collections at the state level of $9.347 billion are proven successful. This figure is $118 million or 1.3% more revenue collected than the previous year at the same time. At the end of June 2021, the tax revenue is expected to land somewhere between $25.918 billion and $28.387 billion, projecting the gap of $2.76 billion and $5.23 billion less than the assumed amount before the pandemic ended the economy.
Payroll amount in Massachusetts dropped ten percent when the pandemic was at its peak. The hospitality and leisure sector deteriorated as the transportation, education, and construction displayed above par reduced business activity. However, external indicators pointed out that the state economy was not as bad as it appeared to be. The real GDP during the first half of the year was under the projected percentage of the USA.
Leading the Economy during Pandemic
The pandemic affected the entire world last year, which is a population of 50 million people worldwide. The governments faced extreme uncertainties, met travel and trade bans to curb infection rates, and introduced social distancing practices. More than half of the world was experiencing lockdown by the mid of last year.
The local governing bodies may introduce and supervise a multi-level system whereby to coordinate a crisis response team that operates a local and federal level with equal representation. The local governing bodies may also separate across different local municipalities to ensure no competition for resources. Regional and municipal communication and collaboration must be stressed upon especially in emergency situations where resources or assistance is required immediately.
Electronic government rules and policies may also be introduced to fasten the response time and support all levels of government involved. This may also prompt a recovery approach towards external rural areas such as border closures and containment measures.
Most consideration and assistance must be provided to the group of people most affected by the pandemic. Further deterioration of resources and financial aid must be curbed. The entire process must be simplified. Support programs must be initiated, and services must be well-targeted, so no one feels left out. Fiscally speaking, equalization policies may help identify the gaps in the present guidelines.
Looking forward to the future, the Boston area is set to gradually ground its feet and return to the economic activity levels before the pandemic. The timeframe is still uncertain. Transactions have reduced over the year, but the investors are proposing numerous options of capital ventures to stay confident and contribute to the resilient national economy of the USA. The sciences, education, and healthcare sector are being trained to aid Boston to recover and present as a gateway to markets across the country.
2021 shall be the year of an optimistic approach. The pandemic will continue to spread. However, vaccines will take hold. The economy is more likely to move forward in the second of the year. However, it will require substantial monetary and fiscal support. Tax rates may be cut, and interest rates may be lowered to provoke spending and investments. This will be done to further jolt the local economy forward by employment and revenue collecting opportunities. Policymakers are strongly advised to continue to support companies and individuals that have been severely affected by the pandemic.