Report: R.I. economic outlook ‘mixed,’ challenges remain

THE NEW ENGLAND ECONOMIC PARTNERSHIP'S 2013 forecast predicted that Rhode Island will continue its gradual economic recovery while continuing to lag the New England region and the country on key economic indicators.
THE NEW ENGLAND ECONOMIC PARTNERSHIP'S 2013 forecast predicted that Rhode Island will continue its gradual economic recovery while continuing to lag the New England region and the country on key economic indicators.

BOSTON – Despite “worrisome economic indicators,” Rhode Island’s economy is looking better now than during the four-year period between 2008 and 2012, according to the fall 2013 New England Economic Outlook report from the New England Economic Partnership.

The report, released Wednesday and written by Edward M. Mazze, distinguished university professor of business administration at the University of Rhode Island, and Edinaldo Tebaldi, assistant professor of economics at Bryant University, cited an improving labor market and accelerated economic growth among the signs that Rhode Island’s economy is continuing its slow recovery.

Nonfarm employment in Rhode Island was 468,300 in the third quarter of 2013, compared with 465,700 jobs during the same period in 2012 and 462,000 jobs in 2011, which suggests moderate improvement in the labor market. However, a recent study by Economic Modeling Specialists International found that all job growth in the state between 2010 and 2013 was in low-wage occupations paying $13.83 an hour or less.

The NEEP employment forecast for the state – projected at a 1.2 percent growth rate between 2012 and 2017 – trailed forecasts for New England (1.3 percent) and the U.S. (1.4 percent). The forecast indicated little or no growth in the state’s manufacturing, trade, transportation and utilities, information services and government employment sectors.

- Advertisement -

The Ocean State’s unemployment rate of roughly 9 percent remains the highest in New England. The NEEP report forecast an unemployment rate of 8.6 percent in 2014, 7.8 percent in 2015, 6.5 percent in 2016 and 6.1 percent in 2017, remarking that “modest job creation in outer years will cause the unemployment rate to stay above the national average until the end of the forecast horizon in 2017.”

Annual labor force growth is forecast at 0.3 percent between 2012 and 2017, compared with a negative annual growth rate of 0.5 percent between 2007 and 2012.

“Rhode Island’s economic challenge continues to be using the state’s assets and capabilities and the region’s strengths to attract and retain businesses and create jobs,” the report stated. “The state will need to grow significantly faster than the other New England states in job creation if the state wants to keep the graduates of its colleges and universities and lower its unemployment rate.”

An average of 5,900 people left Rhode Island between 2005 and 2010, many of them young adults holding college degrees who left the state to look elsewhere for better employment opportunities, the report said.

Rhode Island’s total population is expected to grow 0.1 percent between 2012 and 2017, which represents an increase of 6,000 people in the state. The 65 and older age cohort will see the greatest growth over that time period, increasing at annualized rate of 2.2 percent, while the trend of out-migration among young college graduates is expected to continue.

As a possible solution to the hemorrhaging of youth from the state, the NEEP report recommended emphasizing Rhode Island’s proximity to Boston.

“The quality of life makes the state a great place to live because of its location and easy access to Boston,” the report said, citing assets such as the support of local entrepreneurship from Boston venture capital firms, the city’s robust knowledge economy as a nucleus of educational and medical institutions, the boon of foreign tourists who travel through Boston Logan Airport to visit Rhode Island, and the significant number of Rhode Islanders employed in Massachusetts, particularly in the greater Boston area.

Just under 62,000 Rhode Islanders, or more than 12 percent of the state’s employed labor force, were employed in Massachusetts in 2011, according to NEEP.

Rhode Island’s real gross state product is forecast to reach $45.2 billion in 2014, NEEP reported, an increase of 1.8 percent compared with the 2013 real GSP of $44.5 billion.

The annual GSP growth rate for the five-year period between 2012 and 2017 is projected at 2 percent, a significant improvement over the -0.3 percent growth rate reported between 2007 and 2012, but lagging the 2.8 percent rate predicted for both the New England region and the U.S. economy.

“The overall economic outlook is mixed, with an array of indicators showing that the state economy faces significant challenges in the years ahead even though a modest recovery is underway in the state,” the NEEP report concluded.

Real per-capita income is expected to rise 1.4 percent to $38,349 in 2014, compared with $37,813 in 2013. In 2017, real per-capita income is forecast at $41,278.

The median home price, currently $229,800, is expected to reach $239,500 in 2014 and $244,600 by 2017. The anticipated annual growth rate in median home price between 2012 and 2017 is 3.1 percent, up from a negative growth rate of 5.4 percent between 2007 and 2012 but still trailing the pre-recession-era growth rate of 7.3 percent.

The report forecast a 19 percent growth in the number of housing permits issued between 2012 and 2017, which compares with a 17.7 percent decline in housing permits between 2007 and 2012.

To view the full report visit www.newenglandcouncil.com.

No posts to display

1 COMMENT

  1. For a more detailed explanation of October 2013’s unemployment statistics; Go to http://www.bls.gov/news.release/empsit.t15.htm US U6 Unemployment rate…THIRTEEN POINT EIGHT PER CENT… (13.8%)…U6 STATE LEVEL UNEMPLOYMENT REPORT DUE TO BE PUBLISHED FRIDAY, NOVEMBER 22ND….STAY TUNED….