New Data: Massachusetts’ Economy Lags Behind Competitor States
Roughly a decade ago, Massachusetts’ economy was growing faster than the national average. New data released this month shows this trend could be reversing as the Commonwealth continues to fall behind key competitor states.
Massachusetts Lags Behind the National Average for GDP Growth
The federal Bureau of Economic Analysis recently released its latest batch of state gross domestic product (“GDP”) figures – a key metric for measuring states’ economic performance.
In the third quarter of 2025, Massachusetts’ GDP grew by 3.3% – more than a full percentage point behind the national average. This marks the fourth consecutive year the Commonwealth has lagged behind the US average. Roughly a decade ago, Massachusetts’ GDP growth was nearly a full percentage point higher.
Competitor States Are Outpacing MA on Economic Growth
Key economic competitors like North Carolina and New Hampshire led the nation in GDP growth, tallying 5.6% and 5.5% growth in Q3 2025 respectively. Both were in the top 10 states for largest quarterly growth. Florida – and several other states where tens of thousands of Massachusetts’ residents moved – also beat out Massachusetts’ GDP growth rate.
These states have drawn a significant number of Massachusetts residents over the last few years, and boast significantly lower income and business tax environments. As of late, Massachusetts has seen various headlines losing businesses to these states in key industries – including manufacturing and technology. A recent MOA survey of former residents who moved out to Florida and New Hampshire found the majority cited high taxes as their primary reason for moving.
This trend is a stark contrast to Massachusetts’ standing a decade ago. The Commonwealth was ranked 19th for highest quarterly economic growth in the third quarter of 2016, which improved from its initial growth in the beginning of the year. In 2025, this change reversed: Massachusetts started off with the highest GDP growth in the nation in the first quarter, swinging down to 46th slowest in the nation by the third quarter.
What’s Causing the Slowdown?
Massachusetts has one of the larger state economies in the nation, meaning smaller states may have greater opportunities for growth and change over time. Yet states like Florida and North Carolina all have a larger state GDP, and continue to post higher growth numbers than the Commonwealth.
It’s no secret that our economy has been plagued by internal factors limiting its competitiveness among similar states. Last year, CNBC ranked Massachusetts as one of the worst in the nation for the high cost of doing business here. If overly burdensome state regulations and high taxes are prohibiting local business growth, it’s no surprise GDP growth is slowing down.
Adding insult to injury, a large majority of Massachusetts residents say the cost of living and high taxes are making it harder to live here. The latest population data shows that ultimately, a high cost living and business environment is driving consumers and businesses out of the state. U.S. Census Bureau migration estimates show more than 180,000 people left the Commonwealth in 2024, resulting in yet another year of net outmigration to other competitor states.
While Massachusetts may see some positive quarters of economic growth, the larger changing trends are cause for concern. If residents continue to leave or simply can’t afford to spend their money here, our local economies will flounder. As a result, so will our state-wide economic growth.
Conclusion
Our economy needs a jumpstart. While many factors contribute to economic growth, Massachusetts’ high tax policies and failure to stem cost of living concerns are part of the problem.
Two MOA-inspired ideas headed for the ballot this fall would send the message to residents and businesses that Massachusetts is ready to lay the foundation for strong economic growth. The measures include an income tax cut to help families keep their earnings and boost the state’s economic growth, and a longer-term plan to keep state spending in check so future generations aren’t saddled with exorbitant tax burdens. MOA analysis finds these proposals would boost Massachusetts’ GDP by up to $17.5 billion.
This concerning growth trend is just another flashing red warning: Massachusetts needs to make big changes to support its residents, businesses, and economic future.
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