Friday Update: Napolitano to visit; Amtrak still out
PROVIDENCE – The record flooding and heavy damage suffered by Rhode Island this week will affect the state’s already suffering economy for months to come.
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The two record floods the state suffered in March were “like a kick in the teeth” for a state already suffering from double-digit unemployment, “but we will get through this,” Gov. Donald L. Carcieri said Thursday.
Hundreds of jobs in the state likely were affected by the storm, Keith W. Stokes, executive director of the R.I. Economic Development Corporation, told Providence Business News after a media briefing in Cranston. Rhode Island’s jobless rate was 12.7 percent in February.
Carcieri said it was “too early to tell” exactly what the long-term financial repercussions would be for Rhode Island, but added that the recovery “is going to take a lot of time. It’s going to be slow.”
One leading economic forecaster said the state would be feeling the storm’s impact for the rest of 2010.
“This is not a huge disaster on the scale of New Orleans, but it will definitely have an economic effect,” Andres Carbacho-Burgos, an economist with Moody’s Economy.com who tracks Rhode Island, told PBN on Thursday. The storm closed Interstate 95 for two days and also forced Amtrak to suspend service through the state.
Although it is too soon to estimate the size of the impact, the flooding will “definitely” result in slower economic growth and higher unemployment in the second and third quarters, which end on Sept. 30, said Carbacho-Burgos, who is one of the independent analysts consulted twice a year by state budget officials.
As an example, Carbacho-Burgos pointed to the devastated Warwick Mall, the third-largest shopping center in Rhode Island. Parts of the mall were flooded with up to three feet of water, and its 70 stores remained closed indefinitely on Thursday.
At the moment, “I have no idea how many people will lose their jobs in retail locations such as the Warwick Mall,” Carbacho-Burgos said. Employees in retail, service and manufacturing businesses around the state also have been thrown out of work.
Other key questions about the flood’s impact include how much damage the state’s housing stock suffered, and whether the fallout will decrease state tax revenue significantly. Rhode Island already has a $220 million budget shortfall for the fiscal year that ends June 30 and faces a $427 million deficit for next year.
However, Rhode Island could see a small silver lining in the fourth quarter, from October through December, Carbacho-Burgos said.
By that point the state will be getting federal and other funding for rebuilding, which will boost construction employment. That could be enough to adjust the state’s economic growth forecast “slightly upward,” he said.
“So, in that sense, starting in the fourth quarter Rhode Island will make up at least part of the lost ground as far as income and employment losses,” Carbacho-Burgos said.
A Red Cross official said the flooding may affect as many as 200,000 of Rhode Island’s roughly 1 million residents, and compared the impact to that of a major hurricane.
“When you start talking about the numbers of people who are affected, it’s pretty dad-gum close to a Category 3 to Category 4 hurricane,” Teddy Hampton, American Red Cross disaster relief operations job director, told Bloomberg News.
President Barack Obama called Carcieri late Thursday and the two had a five-minute conversation about the state and the federal government’s response to the crisis, according to Amy Kempe, Carcieri’s spokeswoman.
Kempe said Carcieri expressed appreciation for the effort of the Federal Emergency Management Agency in helping the state deal with the devastation. The president, for his part, reassured the governor that whatever resources FEMA could deliver to Rhode Island would be provided, she said.
On Friday, U.S. Homeland Security Secretary Janet Napolitano is scheduled to tour the state with Carcieri, with a press conference scheduled for noon at T.F. Green Airport.
Staff Writer Chris Barrett contributed to this report.
