Greater Boston faces tough new competition from around the nation and the world that is having a powerful impact on the local economy. The recent economic downturn lasted longer and cut more deeply in Massachusetts than it did nationally. From 2001 through 2004, Massachusetts lost 195,000 jobs — almost half in high-tech industries. Despite this job loss, consumer prices in Metro Boston, driven by housing costs, continued to rise faster than the national urban average. Together, these trends contributed to economic pressure on households and out-migration by Massachusetts residents, with the workforce growing only due to foreign immigration. In fact, Massachusetts was the only state in the country with a net population loss in 2004.

Boston’s stable economic base includes hospitals, universities and the nonprofit sector, but the city lost about 25,000 payroll jobs between mid-2002 and mid-2004, including a number of well-paid "back streets" light industrial jobs in Boston’s neighborhoods. Trends in Boston improved in 2004 with the Democratic National Convention, the opening of the new Boston Convention and Exhibit Center in the Seaport District, increased tourism, new commercial development and hotel rooms, and institutional expansion. Visitors to Greater Boston generated a direct economic impact of $4.22 billion and nearly 100,000 jobs in 2003. Patents awarded to Massachusetts inventors rose in Massachusetts by 8.3% between 2002 and 2003, placing it first among leading technology states. But globalization and industry consolidation are resulting in the continuing loss of locally headquartered corporations and jobs and a more intensely competitive environment generally. Income inequality is growing in Boston and throughout the region.

Did you know?

• Boston, the governmental, cultural and financial capital of Massachusetts, has only 9% of the Commonwealth’s population but generates 16% of its jobs.
• The cost of living outpacing average earnings in 2004, more than 40% of Boston families had incomes below Self-Sufficiency Standard.
• Boston’s working population doubles each day as commuters flow into the city.

See Economy Highlights for the sector Context, Key Trends and Findings, Major Accomplishments and Innovation, Remaining Challenges, and Competition.