Boston, September 26, 2025
News Summary
The Trump administration’s policies regarding research funding and immigration are negatively impacting Massachusetts’ economy, resulting in reduced investments and job threats in higher education and life sciences. The Massachusetts Taxpayers Foundation’s report highlights issues such as job losses and high costs in business operations. Institutions like Harvard and MIT note significant funding cuts, jeopardizing research activities. With a reliance on federal support, the state faces potential GDP hits and a challenging labor market, prompting local governments to implement measures and Governor Healey’s $1 billion investment in critical sectors.
Boston
The Trump administration’s policies on research funding and immigration are adversely affecting Massachusetts’ economy. State officials and analysts warn that federal grant freezes and changes to immigration and research funding are reducing investment, slowing hiring and threatening jobs tied to higher education and life sciences.
Key developments and immediate impacts
The Massachusetts Taxpayers Foundation (MTF) released its 2025 competitive index, showing little change in the state’s overall standing while highlighting areas of concern. The index cites that Massachusetts continues to rank poorly in competitive categories such as business taxes, energy costs, affordable child care, and housing. At the same time, the report notes that Massachusetts maintains high rankings for economic output, wages, workforce education levels, and health care quality.
Federal funding cuts and policy shifts are quantifiable in several ways. Massachusetts could sustain a $2.9 billion hit to its GDP and affect up to 15,500 jobs due to federal funding cuts. The state has launched a tracking effort and Massachusetts launched a database to track the impacts of federal funding cuts, estimating a loss of $366 million to the state. State budget staff and local officials are preparing for scenarios with billions less in federal support; the state relies heavily on federal funding, which accounts for over $16 billion in its budget.
Higher education and research funding pressures
Major research institutions are directly affected. Harvard is contending with nearly $3 billion in federal grant freezes and potential restrictions on international students. MIT could lose over $100 million in federal funding due to policy changes, while the University of Massachusetts Amherst has seen a slowdown in federal grants. Officials in Massachusetts say the federal actions are reducing research activity and may be used as leverage in broader political disputes.
Labor market and business climate
The state faces measurable labor-market weaknesses. Massachusetts has the highest job losses (0.6%) in private employment from September 2023 to September 2024. Over a longer window, the state saw a 2.1% decline in private employment over the past five years, the worst performance nationwide. Remote work trends are allowing workers to relocate to states with lower living costs, which has contributed to workforce pressure and a persistent decline in new business formation; the state currently ranks last in business formations.
Health care costs borne by employers in Massachusetts are rising faster than in many other states, and both unemployment and poverty rates have increased, according to the MTF analysis. The available workforce has shown a small increase, which analysts describe as necessary but not sufficient for expansion.
Sector-specific challenges
The biotech and life-sciences sector is in a downturn tied to decreased investor confidence and regulatory uncertainties. Several indicators, including venture funding and hiring, show contraction in biotechnology-related firms, compounding the effects of federal research funding reductions.
State policy responses and local measures
At the state level, Governor Maura Healey and the Legislature allocated $1 billion over ten years for investments in life sciences, climate technology, and artificial intelligence. New tax credits for families, seniors, and renters have been implemented, and the state authorized over $5 billion for housing initiatives to address affordability and stabilize communities.
Local governments are taking steps to offset immediate needs, including creating stabilization funds for housing aid and other emergency supports. Despite court challenges to some federal actions, state officials express skepticism about a quick reversal of funding cuts and are planning budgets that assume reduced federal receipts.
Budget planning and outlook
Recent discussions among state budget writers focus on uncertainty and contingency planning. Officials are examining scenarios that include scaled-back federal research dollars, slower job growth in life sciences, and persistent pressures on housing and child care affordability. State and local policymakers continue to monitor the newly launched state database and other indicators to refine fiscal responses.
FAQ
- How are federal policies affecting Massachusetts’ economy?
- The Trump administration’s policies on research funding and immigration are adversely affecting Massachusetts’ economy.
- What did the Massachusetts Taxpayers Foundation report find?
- The Massachusetts Taxpayers Foundation (MTF) released its 2025 competitive index, showing little change in the state’s economic standings.
- Which competitive categories does Massachusetts rank poorly in?
- Massachusetts continues to rank poorly in competitive categories such as business taxes, energy costs, affordable child care, and housing.
- Which areas does Massachusetts still rank highly in?
- Massachusetts maintains high rankings for economic output, wages, workforce education levels, and health care quality.
- What is the estimated economic damage from federal funding cuts?
- Massachusetts could sustain a $2.9 billion hit to its GDP and affect up to 15,500 jobs due to federal funding cuts.
- What tracking has the state created for federal funding impacts?
- Massachusetts launched a database to track the impacts of federal funding cuts, estimating a loss of $366 million to the state.
- How are higher education institutions affected?
- Harvard is contending with nearly $3 billion in federal grant freezes and potential restrictions on international students.
- What losses are expected for other universities?
- MIT could lose over $100 million in federal funding due to policy changes, while the University of Massachusetts Amherst has seen a slowdown in federal grants.
- How is private employment trending?
- Massachusetts has the highest job losses (0.6%) in private employment from September 2023 to September 2024.
- What is the longer-term private employment trend?
- The state saw a 2.1% decline in private employment over the past five years, the worst performance nationwide.
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Useful at-a-glance figures
| Item | Figure / Note |
|---|---|
| Estimated GDP hit from federal funding cuts | $2.9 billion |
| Jobs potentially affected | Up to 15,500 jobs |
| State database estimated loss | $366 million |
| Federal funding in state budget | Over $16 billion |
| Private employment change (Sep 2023–Sep 2024) | Highest job losses (0.6%) in private employment |
| Private employment change (past five years) | 2.1% decline — the worst performance nationwide |
| State investment package | $1 billion over ten years for life sciences, climate technology, and artificial intelligence |
| Housing funding authorized | Over $5 billion |
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Additional Resources
- Boston Globe: Trump’s Impact on Massachusetts Economy
- Politico: Trump and Harvard’s Massachusetts Feud
- Boston Herald: Beacon Hill Budget Writers Amid Funding Cuts
- Business Wire: Massachusetts Economy Could Lose Billions Annually
- Axios: Trump and the Massachusetts Economy in Healthcare
- Wikipedia: Massachusetts
- Google Search: Massachusetts economy
- Google Scholar: Trump administration policies Massachusetts
- Encyclopedia Britannica: Massachusetts
- Google News: Massachusetts economy 2025
Author: STAFF HERE BOSTON WRITER
BOSTON STAFF WRITER The BOSTON STAFF WRITER represents the experienced team at HEREBoston.com, your go-to source for actionable local news and information in Boston, Suffolk County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Boston Marathon, Head of the Charles Regatta, and Boston Harborfest. Our coverage extends to key organizations like the Greater Boston Chamber of Commerce and Associated Industries of Massachusetts, plus leading businesses in finance, biotech, and insurance that power the local economy such as Fidelity Investments, Biogen, and Liberty Mutual Insurance. As part of the broader HERE network, we provide comprehensive, credible insights into Massachusetts's dynamic landscape.
