RIPEC estimates Q1 2.9% GDP growth, expects 2% growth in Q2

THE CURRENT ECONOMIC INDICATOR, produced by the Rhode Island Public Expenditure Council and Bryant University's Center for Global and Regional Economic Studies, estimates that Rhode Island's economy expanded at an annual rate of 2.9 percent in the first quarter, four times as fast as the U.S. economy for the same period.
THE CURRENT ECONOMIC INDICATOR, produced by the Rhode Island Public Expenditure Council and Bryant University's Center for Global and Regional Economic Studies, estimates that Rhode Island's economy expanded at an annual rate of 2.9 percent in the first quarter, four times as fast as the U.S. economy for the same period./COURTESY RIPEC AND THE CENTER FOR GLOBAL AND REGIONAL ECONOMIC STUDIES

PROVIDENCE – The Current Economic Indicator report for the first quarter of 2017 showed signs of continued improvement for the Rhode Island economy. The joint report from the Rhode Island Public Expenditure Council and the Center for Global and Regional Economic Studies at Bryant University shows several positive gains for Rhode Island, including a projected GDP growth of 2.9 percent in the first three months of the year.

The report said that year over year, the local economy expanded 1.2 percent, ranked the Ocean State No. 27 in state GDP growth in the nation. This performance comes in stark contrast to the first quarter of 2016, in which the Rhode Island GDP contracted 4.4 percent.

The briefing said that in the first quarter, 10 of the 11 factors used to measure the state’s performance were positive, with only one measured sector negatively affecting performance, as information services employment fell 11.1 percent.

Otherwise, every other factor either grew, or in the case of unemployment, shrank in a positive economic impact.

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RIPEC primarily attributes its positive outlook on upcoming economic conditions to: the growth of construction industry employment by 30.2 percent; Rhode Island’s low unemployment rate, which at 4.3 percent is the lowest it has been since March 2001; a decline in the first quarter of 18.3 percent in initial unemployment benefit claims; the 2.9 percent growth in state GDP, which was higher than the 0.7 percent recorded across the United States; the 3 percent increase in real wages and salary in the first quarter; and the 1.3 percent growth of the general sales and gross receipt taxes, which the report uses as an aggregate for state demand.

Due to these factors, RIPEC and Bryant predict that the recent economic momentum will continue and project a 2 percent expansion of GDP in the second quarter of 2017.

The report also said that the New England economy grew at an annualized rate of 2.4 percent in the first quarter of 2017. The CEI increased 5 percent, 5 percent and 1.6 percent in the last three quarters of 2016, compared with national GDP growth of 1.4 percent, 3.5 percent and 2.1 percent in the same time period nationally.

Yet, RIPEC’s report also warned economic caution, “Rhode Island’s economic growth over the last four quarters is promising,” said John C. Simmons, executive director of RIPEC.  Simmons added, “However, there are causes for concern, and the strength of the state’s economy should not be overstated.”

Citing the most recent two-year budget deficit projections, Simmons said that, “these revised estimates raise questions about the nature of economic growth in Rhode Island, the types of jobs we are creating, and the robustness of the state’s recovery since the Great Recession.  Clearly, more work must be done to promote the kind of economic growth and development that is broadly-based and sustainable in the long term, including a focus on growing high-wage jobs, attracting businesses in high-growth sectors, and generally making Rhode Island a more attractive place to live, work, and do business.”

Chris Bergenheim is the PBN web editor.

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