Report: R.I. economic outlook improving, but challenges remain

THE NEW ENGLAND ECONOMIC PARTNERSHIP'S fall forecast predicts that Rhode Island's economic growth would increase but still lag behind the region and the nation as a whole.
THE NEW ENGLAND ECONOMIC PARTNERSHIP'S fall forecast predicts that Rhode Island's economic growth would increase but still lag behind the region and the nation as a whole.

PROVIDENCE – Rhode Island’s economic outlook improved over the last year, but “significant uncertainties and challenges” continue to face the Ocean State, according to a report from the New England Economic Partnership.
The report, discussed Thursday at the fall economic outlook conference – “The Road Ahead: Economic Development Challenges and Opportunities for New England” – in Boston, noted Rhode Island’s drop in its unemployment rate from its peak of 11.9 percent in March 2010 to 7.7 percent in July. It also noted that 9,700 jobs were added between December 2012 and July 2014.
But it pointed that just under 43,000 Rhode Islanders were unemployed, and the state’s unemployment rate is the third highest in the nation. Rhode Island also is among the few states with total employment still below pre-recession levels.
And with the housing market and construction industry still subject to volatility, it can make it “hard and risky” for individuals and developers to engage in transactions and make decisions related to housing in the state, the report states.
“This report shows that the state’s economy is still operating with ‘brakes on’ and that the pace of growth will continue to be slow, particularly in key industries including manufacturing, construction, information, financial services, and trade, transportation and utilities,” it reads.
The report says that the state’s population is getting relatively older, while the prime working-age group is stagnant, limiting the growth of the labor force. It also states that the state has a large number of adults without a college degree whose skills are limited compared with labor market needs.
“These people face significant difficulties to secure a job and a stable source of income and, thus, are subject to structural unemployment and poverty. Active educational polices targeting this population cohort together with significant investments in infrastructure and capabilities to deliver workforce training are needed in the state,” the report states.
Rhode Island could use better “branding,” according to the report. Identifying the state’s key assets and advertising the state as a modern economic environment that is strategically located with “exceptional business opportunities and great living conditions” is needed, it states.
Addressing these issues “will be a game changer for the state,” the report states.
Other report highlights:

  • Real gross state product is expected to increase on average by 1.9 percent from 2013 to 2018, compared with 2.4 percent for New England and 2.7 percent for the U.S. for the same period
  • Accounting for expected inflation, per capita income is expected to increase an average of 1.3 percent from 2013 to 2018, compared to 2.4 percent for New England
  • The Rhode Island labor force is expected to increase 0.4 percent per year from 2013 to 2018
  • The annual growth rate of employment is forecast to be 1.1 percent from 2013 to 2018; New England employment is expected to grow 1.2 percent during that period
  • The median price of a home is expected to increase 2.8 percent from 2012 to 2017
  • The population is expected to grow 0.2 percent from 2013 to 2018

New England as a whole is experiencing the same trends as Rhode Island with higher growth rates and lower unemployment rates, but also remains in an extended period of slow growth, according to the report.

“The region faces many economic challenges. Highlighted in the forecast is the challenge of being in an extended period of slow growth and slow recovery from the 2008-2009 recession. The slow recovery makes it difficult for many individuals and families across the region to meet their needs and to invest in their future. This is especially true as income growth for the majority of residents has been weak or non-existent,” New England Forecast Manager Ross Gittell said in a statement.

“The challenges associated with an extended period of slow job and income growth are not unique to New England states, as these challenges are evident in most states across the nation and pervasive globally. What is relatively unique in New England is the region’s demographics -with a rapidly aging population and steep declines in young adult population threatening the region’s workforce skills and education advantage,” he said.

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