News Summary
A report by Boston University’s Mark Williams reveals potential economic damage from Trump administration policies affecting key sectors in Massachusetts. The analysis indicates that federal funding cuts, tariffs, and immigration restrictions could lead to job losses and reduced GDP. With eight of the state’s top ten employers at risk, proactive measures are necessary to mitigate these challenges and protect the state’s interconnected economy.
Boston – A recent report by Mark Williams, a finance professor at Boston University, has raised alarms about the potential economic fallout from the Trump administration’s policies on Massachusetts. After four months of rigorous analysis, Williams concluded that tariffs, funding cuts, and immigration restrictions could significantly harm key industries in the state, including higher education, health care, biotechnology, and tourism.
Williams characterized these policies as an economic attack on Massachusetts, making the state particularly vulnerable due to its interconnected and knowledge-driven economy. The report highlighted that, out of the state’s top ten employers, eight—such as Mass General Brigham, Beth Israel Lahey, Harvard University, and MIT—are likely to be adversely affected by reductions in federal funding.
During a presentation of nearly 100 slides, Williams detailed several potential economic risks, which align with a broader narrative of uncertainty that has emerged since the inception of the Trump administration. He outlined three possible scenarios for Massachusetts’ economy: a slowdown in growth without a recession, a U.S. recession, and a global recession.
Projections for 2026 indicate that the state could face increased unemployment, reduced payroll for employers, declining gross domestic product (GDP), and decreased state tax revenue. While the bleakest forecasts do not predict losses as severe as those sustained during the 2007-2009 recession, the middle scenario mirrors the less severe recession of 2001.
Massachusetts is the leading recipient of funding from the National Institutes of Health (NIH) per resident in the United States. In fiscal 2024, local institutions are expected to receive approximately $3.5 billion, including $1 billion allocated for overhead costs. These funds are currently embroiled in legal disputes, forcing state schools to freeze hiring, halt graduate admissions, and scale back research activities.
In response to the anticipated economic challenges, Governor Maura Healey announced a hiring freeze across much of the state government. Williams estimated that if NIH funding cuts are realized, they could result in a loss of 14,000 jobs by 2026. He also pointed out that Trump’s tariffs on countries like Canada, Mexico, and China could further exacerbate the job crisis, potentially resulting in the loss of an additional 20,000 jobs, as trade constitutes approximately 9% of Massachusetts’ GDP. Should the tariffs remain in place, import and export volumes might decrease by 20%.
Furthermore, an immigration crackdown is predicted to result in a staggering $3.7 billion loss in spending by 2026, leading to a projected loss of $481 million in tax revenue and 45,500 jobs, including 4,500 entrepreneurs. The perceived unwelcomeness stemming from immigration policies could lead to declines in both international students and tourism, which are significant contributors to the local economy.
Furthermore, if state and municipal bond ratings are downgraded as a result of policy implications, Massachusetts may not receive federal assistance as it did during the pandemic in the event of a recession. Williams emphasized that Massachusetts’ historical strengths in education and innovation could face severe challenges due to these federal policy changes.
The report also noted that the contributions of research and education have historically driven significant societal advancements, underscoring the need for these sectors to be fiercely defended in order to maintain competitiveness. In light of growing concerns over the potential economic impacts, the Greater Boston Chamber of Commerce has reestablished a coalition to advocate for federal research funding.
Williams urged state leaders to take proactive measures to address these pressing issues rather than rely on hope for beneficial changes in federal policy. His proposal included enacting a comprehensive plan to challenge proposed funding cuts and enhancing the state attorney general’s budget to legally contest these federal policies actively.
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