Shutdown squeeze ups the odds of a Mass. recession

 

New from CommonWealth Beacon GETTING WARMER: Even as Massachusetts summers trend hotter and drier, policymakers are still largely focused on flooding as the existential climate threat to housing and infrastructure. Jennifer Smith digs in.  OPINION: Massachusetts has one of the least transparent, least productive legislatures in the country, writes Aaron Singer, a Walpole-based filmmaker and activist. Despite our state’s progressive reputation – and a Democratic supermajority in both chambers – he says our State House won’t pass basic party priorities.  OPINION: The Department of Health and Human Services, under the Trump administration, has repeatedly claimed that its more measured approach to vaccine recommendations is intended to restore public trust – in vaccines and in public health in general. This may or may not work, writes Shira Doron, the chief infection control officer for Tufts Medicine, but one thing is certain: They are losing the trust of the scientific community.

Shutdown squeeze ups the odds of a Mass. recession   October 14, 2025 By Jennifer Smith

Facing waves of federal funding cuts, Massachusetts’s financial picture was already looking bleak as October approached. Legislative leaders warned of revenue slowdowns, universities and medical systems identified programs that could be cut or pared back, and the state attorney general’s office continued with a barrage of lawsuits against the Trump administration for grant cuts and immigration crackdowns.

Then, of course, Congress entered a budget stalemate over expiring federal tax credits that have helped millions of Americans pay for health insurance. The resulting federal government shutdown is now approaching its third week.

This week on The Codcast, CommonWealth Beacon reporter Jennifer Smith interviews Mark Williams, finance lecturer at the Questrom School of Business at Boston University. Williams projected in April that the level of federal spending cuts and the Trump administration’s aggressive immigration policy changes posed a specific danger to the state economy. It’s only gotten worse since then, Williams said.

“The shutdown itself is interesting because it is just a layer that creates additional uncertainty in the economy of the state of Massachusetts, and then also the US economy and globally,” said Williams. Hundreds of thousands of federal workers across the country are either furloughed or working without pay, which Williams noted has a knock-on effect.

“Employees don't get paid, they can't spend,” he said. “If they can't spend, the economy doesn't grow. And if the economy doesn't grow, GDP shrinks, and then of course eventually we have a recession.”

Based on updated federal cuts under the tax bill passed on July 4, plus lingering effects if the shutdown drags on, Williams projects that the state could enter a recession by the third quarter of 2026 unless aggressive action is taken by lawmakers to pare back spending and rally behind the immigrant population essential to the state workforce.

Even if the Legislature found an appetite to tap into the “rainy day fund,” which it is notoriously loath to do, Williams projects offsetting the federal cuts would rapidly and dangerously siphon state reserves.

And the fate of the federal workforce in Massachusetts becomes less certain by the day.

Just under 1 percent of Massachusetts’s workforce is either a civilian federal government employee or active military, Williams noted. On Friday, the Trump administration began to follow through on its threat to use the shutdown as a mechanism to lay off substantial numbers of federal workers.

”We'll be cutting very popular Democrat programs that aren't popular with Republicans," President Trump said Thursday at the White House. The White House announced over the weekend that it identified Pentagon funds that could be shifted to pay military troops before they missed a paycheck on October 15.

The federal workforce purges under the current Trump administration, beginning with the slash-and-burn tactics of the so-called Department of Governmental Efficiency under the direction of Elon Musk, have made once reliable and essential jobs feel risky, Williams said.

“It used to be that you'd go into sort of a federal job, and the pay wasn't that great, but benefits were good and the stress was low,” he said. “And now it's the opposite. Pay isn't very good, it's not predictable, and it's quite risky to potentially lose your job without having any control over it.”

On the episode, Williams discusses vulnerable Massachusetts workforces (3:45), political scrapping at the federal and state level (9:15), and what levers local officials could pull (20:15).

LISTEN

More Context ‘No margin for error’: State economic check-in spotlights tricky balancing act (September 2025)  Massachusetts braces for ‘gut punch’ of health insurance costs if Congress fails to act (September 2025)

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What We're Reading HEALTH: Some Massachusetts lawmakers want to join three northeast states – Maine, Connecticut, and New York – in ending religious exemptions for vaccines. As of the 2024-2025 school year, more than 1.3 percent of the Bay State kindergarten class had religious exemptions. (GBH News)  FUNDING CUTS: The left-leaning Massachusetts Budget and Policy center is urging the Healey administration and state lawmakers to “opt out” of several new federal laws enacted as part of President Trump’s tax cut and policy bill, to help offset the looming fiscal hit to the state’s coffers. (The Eagle-Tribune – paywall)  COURTS: Federal judges in Massachusetts, Rhode Island, New Hampshire, and Maine have become key players in the legal wars over Trump's policies. A Reuters analysis found that at least 72 lawsuits challenging Trump's policies have been filed in federal courts in those four states by plaintiffs, including Democratic state attorneys general, advocacy groups, and institutions targeted by the administration. (Reuters)  HEALTH: Two unions claim there is a crisis at state-operated psychiatric hospitals due to a large influx of patients coming from the criminal justice system, including at the Worcester Recovery Center and Hospital. The result, the unions say, is a mix of inadequate patient care and concerns for the physical safety of patients and staff. (Worcester Telegram – paywall)  INSURANCE: The owner of the Fall River assisted living facility, where 10 people perished and dozens more were injured in a fire, is facing several lawsuits. But he doesn’t have liability insurance, which is not required for assisted living facilities in Massachusetts, unlike other businesses such as bars. (MassLive)

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