Business Brief
Politics collides with the bread and butter of the Bay State economy
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The economic headwinds blowing into Boston are all coming from Washington, D.C., as the Trump administration targets the state's core sectors: higher education and health care.
Why it matters: Policy changes and funding cuts from the Trump White House threaten the greater Massachusetts economy, which is fueled by higher-paying research and teaching jobs, investment in life sciences and the influx of international spending.
- The combination of research funding cuts, threats to end tax-exempt status for universities and visa revocations for international students could rock not just the medical and university systems, but the region's identity and economic stability.
What they're saying: "Universities and teaching hospitals are to Boston what cars are to Detroit, what energy is to Houston or finance is to New York," Lawrence Bacow, a former president of both Harvard and Tufts, told the New York Times.
Catch up quick: Harvard University is at the epicenter of Trump's war against higher education. At the same time, Massachusetts' progressive culture has come under fire from Republicans in power.
- Trump has attempted to freeze $2.2 billion in research funds for Harvard and rescind schools' ability to enroll foreign students.
- Massachusetts universities received more than $2 billion in federal research grants last fiscal year, with $686 million going to Harvard.
- "Sanctuary City" communities like Chelsea and Somerville have taken the White House to court over cuts to federal funding.
- Boston's Mayor Michelle Wu — already struggling with a tight city budget — was called before Congress over immigration policies in March. On the line are $300 million in federal funds for the capital.
Threat level: The state receives roughly 31.7% of its annual revenue, $25.7 billion in 2022, from the feds.
Massachusetts leads the nation in federal science funding from the NSF and NIH — spending Trump is looking to cut.
- Mass General Brigham, Harvard Medical School's teaching hospital partner, received over $1 billion from NIH.
- The already-high cost of living in New England is being exacerbated by inflation, which hit 4.5% in the region in February, higher than the national rate of 2.8%.
Zoom in: The impacts are already hitting local workers.
- Harvard, MIT, Brown and several other schools have frozen hiring.
- UMass Chan Medical School has rescinded PhD admission offers and anticipates layoffs.
- Boston and Cambridge's biotech sector has a record 16.1 million square feet of unleased lab space to fill.
What we're watching: Tourism — a roughly $25 billion sector for Mass. — is another area that could see a downturn if international visitors avoid the U.S.
The bottom line: Boston's economic woes extend beyond the higher education system and local economy.
- A slowdown in research would mean delays in the kinds of medical and pharmaceutical breakthroughs patients worldwide depend on.
- Domestic and international manufacturing centers would be hurt if Mass.-invented products don't make it to market.
- Changes to tariffs, science funding, higher education and tourism could create a quadruple-whammy for the Bay State economy.