Monday, October 6, 2008

Boston - Recession-proof city?

It's official! Boston isn't in recession, at least according to The New York Times article "For Most Cities, Recession Has Arrived". This makes sense, given that the major industries of Massachusetts are textiles, electronics, publishing, education, tourism, and fishing. They are rather unrelated to the current economic downturns caused by the credit market crash.

But wouldn't the financial market have a profound effect on supply and demand, buying power, pricing, etc. in all these industries? How about the tech startups, venture capital, and investment management firms in Boston? They are some of the major industries leading the output generated by the state. Why's Nation Bureau of Economic Research claiming that Boston's economy is not only contracting, but also growing significantly.

The article "noted that the cities with economies still expanding as of August were often those more reliant on education, health care and energy for jobs. But even in those places the indicators point down." Boston has the highest school density, so it makes sense. Health care... I don't have a good answer, but maybe the state-mandated health insurance policy contributed to this? Since the program is funded by the federal government allowance to make this happen, the money actually comes out of Uncle Sam's pocket. And, of course, we the entrepreneur community in Boston have seen plenty of capital infusion and labor transfer into the energy sector.

If anybody has a good explanation for this, let me know. Meanwhile, go Boston!
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