New report says Mass. financial system is slowing down in areas the place it used to steer

A new report shows that since 2020, the Massachusetts economy has been slowing down in key areas where it used to lead.

The Pioneer Institute released a report Thursday titled “Massachusetts at Risk: GSP Growth Slows Relative to Competitor States.” In the report, researchers warned that while Massachusetts still has the second-highest real Gross State Product (GSP) per capita in the U.S., the state’s position as an economic leader is at risk.

Driven by data from the U.S. Bureau of Economic Analysis, researchers found that the most significant slowdown has been in the state’s professional, scientific, and technical services (PSTS) sector, which is now trailing behind national averages. According to Pioneer, the PSTS sector includes scientific research and development, computer systems design, engineering, and scientific consulting firms.

The most notable drop in the state’s per capita GSP growth was between 2022 and 2023, when the Commonwealth ranked among the three slowest-growing states in the nation. Growth improved in 2024 but still trailed the national average, according to the report.

The slowdown starkly contrasts the state’s previous role as a national leader in per capita GSP growth.

“Massachusetts’ flagging leadership in the professional, scientific, and technical sectors is clear and troubling. It is the engine of Massachusetts’ innovation economy,” said Aidan Enright, Pioneer’s economic research associate and the report’s author. “Continued inaction on longstanding barriers to growth, like housing and taxes, leaves the state less able to compete for talent and investment—and even more vulnerable to new federal policy pressures.”

According to the report, from 2020 to 2024, Massachusetts’ private sector per capita real GSP grew by just 12.5 percent, compared to a national average of 13.3 percent. Competitor states like Florida, Texas, and North Carolina saw growth of 26 percent, 22.3 percent, and 17.4 percent, respectively.

Data also showed that Massachusetts’ per capita real GSP growth fell from the fourth fastest in the nation from 1998 to 2019 to the 28th fastest from 2020 to 2024.

Researchers warned that the state’s economy will continue to face an uphill battle due to challenges at both the federal and the local level.

“The Trump administration’s actions on NIH grants and tariffs will create a significant drag on Massachusetts’ growth,” said Jim Stergios, Pioneer’s Executive Director. “But it’s our own policies that are driving up housing costs and pushing residents and employers out. Beacon Hill needs to have a greater sense of urgency to address these self-inflicted wounds.”

Morgan Rousseau is a freelance writer for Boston.com, where she reports on a variety of local and regional news.