Total nonagricultural employment is the measure of the economy’s job count most commonly used by economists. Employment is estimated from the Current Employment Survey, which is administered to private, non-farm businesses and government offices and asks questions on the number of jobs, wages, hours, and other measures of work force activity. Significantly, this employment figure is a measure of the number jobs, not the number of people who have a job. If a person holds two jobs both are counted. People who are self-employed are not counted and full-time jobs are not differentiated from part-time jobs. These nuances are important to remember when analyzing employment data.

Employment changes are one of the major determinants of the business cycle, with the job count generally increasing during the expansionary segment of an economic cycle, and contracting in the recessionary period. This chart displays New England’s employment compared to that of the United States, both indexed to January, 1990 levels. The region’s employment path was similar to the U.S. throughout most of the 1970s and 1980s. In the late 1980s, however, employment levels dropped sooner and more steeply in New England than in the United States, as the region suffered more than the rest of the country during the recession of the early 1990s. Employment in New England has not caught up with that nationally since that time, and the rate of employment growth has been slower than that of the nation in the last decade.

Gross State Product (GSP) is the dollar value of all goods and services produced in a state. Similar to the national Gross Domestic Product (GDP) figure, GSP growth helps to track the health of a state’s economy. In the chart on the left, year-over-year growth rates of the sum of the six New England states’ GSPs are compared to the 50 states’ to gauge the region’s relative economic performance. New England outperformed the U.S. throughout most of the 1980s, but suffered more during the early 1990s recession. In the middle and late 1990s, New England’s Gross State Product recovered and remains on pace with the nation. GSP data are released roughly two years after the last reporting period and do not yet describe how New England has fared during the most recent recession.

The pie chart on the right shows the contribution of each state’s economic output to the region’s total GSP in 2001. Connecticut and Massachusetts together contribute more than three-quarters of New England’s aggregate GSP, with nearly one half from Massachusetts alone. These figures are roughly consistent with state shares of the total New England population.

These two charts illustrate trends in the New England office space market -- an important indicator of the health of corporate America. The Torto Wheaton Rent Index is an estimate of average contracted rental price of office space in a metro area’s downtown market. The office vacancy rate measures the fraction of commercial real estate zoned for office space that is currently vacant and available for sale or lease. Typically, these data series move in opposite directions. When vacancy rates rise due to slowing demand or excess supply, downward pressure is exerted on the rent index.

As the charts reveal, during the economic boom of the 1990s, the demand for office space skyrocketed, caused rents to rise to record levels and vacancy rates to plummet. The subsequent recession has registered a drop in the rent index and a sharp spike in the office vacancy rate in New England markets, as layoffs and company downsizing have translated into less need for office space. Further, the long lag time between a building’s conception and its completion have meant that buildings that were planned during the economic boom have only recently become available, resulting in an growing supply at a time of shrinking demand.

Personal income is the sum of all income received by, or on behalf of, the residents of a region. The dominant component of personal income is wage and salary disbursements, which reflect the sum of all workers’ pay before taxes and other deductions. Dividends, interest, and rental income received from investments such as mutual funds, bank accounts, and property make up just under 20 percent of New England’s personal income. Transfers, mainly in the form of Social Security, Medicare, disability insurance, and food stamps, account for the third largest source of personal income; these payments represent a “transfer” of financial resources from the government to individual residents.

Between 1996 and 2001, New England’s total personal income grew by more than 35 percent and outpaced the growth rate of national income. New England’s personal income growth primarily reflects the more than 40 percent growth in wage and salary disbursements. Dividends, interest, and rental income saw growth rates of over 36 percent. As the region experienced above-average prosperity, residents’ relative need for government assistance slackened, resulting in slower growth in transfer payments in the region compared to the U.S.

Real income provides a more realistic picture of changes in residents’ purchasing power over time by adjusting the nominal personal income in each period for the change in price levels. In recent years, the Boston area has experienced higher inflation than the rest of the United States. Consequently, while nominal figures show a 3 percent growth in personal income between 2000 and 2001, real income in New England actually fell in this period. So far, this recent decrease in New Englanders’ real income has not been as severe as the decrease experienced during the recession of the early 1990s.

This chart shows per capita personal income for each New England state indexed to the national average. Dividing a state’s total personal income by its population yields per capita personal income. Indexing this value to the U.S. figure illustrates the average economic well-being of state residents relative to the nation as a whole. If the ratio is greater than 1, then the state’s residents on average receive more income than the average U.S. individual, while the opposite holds true for states with values less than 1.

Per capita personal income has been higher in New England than the United States since World War II. However, this pattern is not uniform across the six regional states. Currently, Connecticut has the highest personal income per capita in the nation, whole Maine ranks 35th among all states. It is important to note, however, that per capita personal income does not account for cost of living differences between states, a major determinant of the relative economic well-being of a state’s residents.

The unemployment rate reflects the percent of the civilian labor force that is unemployed. To be considered unemployed, an individual must be age 16 or older, without a job, have actively looked for work within the previous four weeks, and be currently available to work. The civilian labor force is the population 16 years old and over that is either employed or unemployed but excludes all inmates of institutions and persons on active duty in the Armed Forces. Importantly, the unemployment rate does not capture “discouraged workers,” or those who want a job but have given up their active search for work due to poor labor market conditions. The unemployment rate is highly correlated with Gross Domestic Product, or economic performance. As the economy strengthens, the unemployment rate tends to fall, while in times of recession, unemployment rises.

New England's unemployment rate was higher than the nation's throughout most of the 1970s. In the 1980s however, the region's rate fell faster and remained well below the national rate, in some years by more than two percentage points. New England kicked off the 1990s in deep recession and experienced a three-year stint of high unemployment rates that once again surpassed the national rate. Recovering after 1993, regional unemployment declined rapidly through mid-2000 amidst of the economic boom. Despite the onset of the current recession in early 2001, the joblessness rate remained below the national rate through the end of 2002.

The Consumer Price Index (CPI) is one of the most widely used measures of inflation. It tracks the prices urban consumers pay for a representative "market basket" of goods and services. This “market basket” is developed using detailed spending information obtained from families and individuals about their actual purchases in more than 200 categories of products and services.
The current price levels for the basket are indexed to the price levels in the base period (1982-1984 for most categories), to produce the CPI. Increases in the index show inflation, and economists often measure the year-over-year changes in the index to track the rate of inflation over time.

New England’s urban consumers are represented in the CPI through consumers surveyed in the Boston metro area. Since the 1950’s, Boston’s year over year change in CPI has generally tracked U.S. price changes, with inflation tending to slow during periods of recession and to speed up during periods of economic expansion.

The Conventional Mortgage Home Price Index (CMHPI) is a measure of home prices based on the value of homes whose mortgages are purchased or securitized by Freddie Mac or Fannie Mae. The CMHPI uses a sophisticated statistical method that compares the price of a house each time it is sold or appraised, generating a measure of the change in home prices over time. The building permit data provide an indication of the number of new homes being built by estimating the number of permits issued to build privately owned buildings. This number, however, does not equal the number of new homes because some permits may be issued months or years before a home is actually built. Building permits are generally considered a leading economic indicator, because they tend to move prior to an economic expansion or contraction and foreshadow demand for durable goods. Permits and the CMHPI tend to move together, rising and falling with the demand for housing.

As illustrated in the CMHPI, for most of the 1980s, year-over-year growth in New England home prices briskly outpaced growth in national home prices. Towards the end of the decade, however, growth rates in the region’s home prices began to falter and fell sharply through the 1990s, with house prices actually declining in the first half of the decade. Meanwhile, growth in national home prices weakened in the 1990-1991 recession, but remained positive. After 1995, New England home prices began to rebound, and by the late 1990s, were once again outpacing the national rate of growth. While the recent recession has led to a tapering off in the growth of home prices nationwide, New England has seen a hearty 10 percent increase between 2000 and 2001.

Housing permits in New England followed a similar pattern. After strong year-over-year growth in the first half of the 1980s, permits fell sharply through 1990, in large part due to the real estate and banking troubles that disrupted the New England economy during that time. Since the 1990s, however, both national and New England housing permits have experienced saw-tooth changes. Importantly, in the most recent recession, permits did not decline, but increased.