Report: R.I. experienced K-shaped recovery from pandemic in 2020

THE R.I. DEPARTMENT OF REVENUE revealed via a commissioned report that the state experienced a "K-shaped" economic recovery in 2020 from the COVID-19 pandemic as the retail trade sector performed above expectations and the state's services sector suffered. / COURTESY R.I. DEPARTMENT OF REVENUE

PROVIDENCE Rhode Island experienced a “K-shaped recovery” from the COVID-19 pandemic as the retail trade sector thrived, while the services sector suffered.

The retail sector was buffeted by sales volume in the building materials and garden equipment sector, and the services sector’s lull was largely attributed to performance of the accommodations industry, such as hotels and lodging, as well as the sales activity of restaurants.

That’s according to a report by the Fairfax, Va.-based technology firm, Chainbridge Software LLC commissioned by the R.I. Department of Revenue’s Office of Revenue Analysis. The report found that the effects of the COVID-19 pandemic diverged in 2020 for various business sectors across the state, producing an uneven, K-shaped recovery as the year progressed, with some industries continuing to underperform, and others, overperfomlng baseline projections.

The report analyzed the impact of the pandemic on the state’s economy in 2020 relative to an estimated pre-pandemic baseline. The firm used the state’s sales tax data for its analysis.

- Advertisement -

Paul L. Dion, chief of the Office of Revenue Analysis, said, “I would characterize the report as confirmation of what we suspected was the impact of the pandemic on Rhode Island’s economy but providing us with a level of detail that we lacked.”

“I think there are two important pieces to this,” Dion said. “First, targeting economic recovery initiatives to those sectors most negatively impacted by the pandemic with the understanding that it is highly unlikely that we can restore the economy to what it was before the pandemic. Second, determining what is to be done with and for the workers displaced by the changed economy as a result of the pandemic.”

The state’s retail sector, particularly the hardware subsector that includes building materials and garden equipment, proved to be the best-performing portion of the state’s economy. The subsector was found to have never experienced a decline in taxable sales relative to its estimated pre-pandemic baseline in 2020.

Even beyond hardware sales, the retail trade sector as a whole weathered the pandemic much better than the state’s services sector.

The report found that sales collections on retail electronics largely exceeded projections and, after a dip from February through May, so did collection on sales of furniture and automobiles. The increase in furniture sales later in the year was potentially attributable to a lot of individuals working and staying at home implementing renovations and home improvements, the report said.

The DOR said that the state’s worst-performing services sector was accommodations, which saw a significant drop in taxable sales amid state-mandated shutdowns early in the pandemic with some recovery later in the year. The sector never attained its estimated pre-pandemic baseline projections.

The state’s restaurant sector was also significantly impacted throughout the year, the report found, similarly never recovering to baseline in the 2020 year.

The DOR commissioned the report to aid the state’s policymakers with their pandemic recovery efforts.

The full report may be found online.

Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.

No posts to display