Economic Conditions Under the Trump Administration
(Continued)
Nearly a year into Trump’s second term, economic unease is widespread in Massachusetts, not only among state leaders but across the private sector. Employers remain uncertain about tariffs and concerned about federal research funding cuts, all while facing the state’s already high cost of living.
The Associated Industries of Massachusetts (AIM) reported that its business confidence index declined again in October, marking eight consecutive months in negative territory, the longest stretch since the early months of the pandemic. AIM pointed to the ongoing federal shutdown, “rising prices,” and uncertainty around tariff policy as chief factors. One employer noted, “[F]ederal government contracting is decreasing for small business and tariffs are hurting everyone.”
Evan Horowitz of Tufts University said the pessimism is expected, arguing that Massachusetts is likely already in a recession: “The driving force is federal… unparalleled levels of uncertainty and disruption resonating from Washington.” Employment has remained largely unchanged for over a year, and the state’s unemployment rate has risen to 4.8%, now surpassing the national average.
The latest AIM confidence score of 46.5, which is below the optimistic threshold of 50, is nine points lower than it was a year ago. Only six periods in the past 34 years have seen such prolonged pessimism.
Retailers Association of Massachusetts President Jon Hurst agreed that uncertainty is a problem but placed more blame on state-level costs: “Massachusetts, frankly, has the highest cost of doing business and the highest cost of living anywhere in the country… That’s a Massachusetts problem. That’s not a Washington problem.”
However, analysts warn that federal cuts may hit the state harder than others because Massachusetts depends heavily on “meds and eds.” The Trump administration has begun reducing hundreds of millions in research funding—funding that has historically averaged $8.6 billion annually and underpins the state’s innovation economy. AIM president Brooke Thomson cautioned that losing these funds could have “the exact same type of impact on small and microbusinesses that we saw with COVID.”
To offset the cuts, Gov. Maura Healey has proposed a $400 million state investment to stabilize research and innovation sectors. As Doug Howgate of the Massachusetts Taxpayers Foundation said, “The risk that we face for federal changes is bigger than other places, and we need to act proactively to address that.” (Commonwealth Beacon)