The Massachusetts economy has not fully caught up with the news that labor shortages are constraining growth. Real gross state product (GSP), as proxied by the Massachusetts Current Economic Index, grew at an annualized rate of 4.3 percent in the first quarter of 2000, only moderately below the 5.4 percent pace of U.S. gross domestic product (GDP). Employment-related measures over the twelve-month period ending in April bear this out. The number of employed Massachusetts residents increased by 1.3 percent, and the number of jobs in the state grew by 2.1 percent, matching the expansion-average annual rate of job growth. Employment gains continued to outpace both population and labor-force growth, driving the unemployment rate down to 2.8 percent in April. Furthermore, the near-term outlook is for continued demand pressure, despite the sharp correction in stock markets in March and April. The Massachusetts Leading Economic Index for April, a forecast of real GSP over the next six months, stood at 3.1 percent. The index is composed of 10 indicators, including the Bloomberg Stock Index. Weakness in the stock index was more than offset by strength in employment, labor earnings, and motor vehicle purchases. Though the leading index is indicating a continuation of above-trend growth, the 3.1 percent projection does represent moderation from earlier in the year
