Lack of momentum hindering growth

SIGNS IMPROVING: Modest growth is a sign Rhode Island’s economy is at least stabilizing, says Bryant University associate professor of economics Edinaldo Tebaldi. / COURTESY EDINALDO TEBALDI
SIGNS IMPROVING: Modest growth is a sign Rhode Island’s economy is at least stabilizing, says Bryant University associate professor of economics Edinaldo Tebaldi. / COURTESY EDINALDO TEBALDI

Rhode Island is continuing its slow march toward an improved economy, but still struggling to find some economic momentum, according to economists in the Ocean State.
While the forecast is for modest growth, Rhode Island’s current ranking as the state with the highest unemployment rate in the nation at 9.2 percent, along with its glaring lack of adequately skilled workers to fill open jobs, casts a familiar shadow over the economic landscape.
“We are doing better, when you paint the bigger picture – if you look from 2007, at the beginning of the recession, to 2012,” said Bryant University associate professor of economics Edinaldo Tebaldi.
“We have Rhode Island economic indicators telling us the average growth in 2012 was about 2 percent and we’ve estimated about 3 percent growth in the last quarter of 2013,” he said. “Overall, for 2013, there’s more than 2 percent growth in GDP,” said Tebaldi.
Calculating strictly by job numbers, there’s been improvement, he said.
As of January 2011, there were 459,500 people employed in Rhode Island, he said. That employment number rose to 475,100 as of January 2014.
“That’s a [sizeable] 3.4 percent increase in the number of jobs based in Rhode Island,” said Tebaldi.
The current slow growth looks even better if you view it from a longer-term perspective, he said.
“Starting with the recession in 2001, we saw very little growth in Rhode Island in population, GDP or employment,” said Tebaldi.
“We started to see growth in 2012,” he said. “Seeing modest growth is a positive sign the economy is doing a bit better.”
The Rhode Island Current Economic Indicator by Rhode Island Public Expenditure Council and Bryant University’s Center for Global and Regional Economic Studies released Feb. 17 stated that, “Overall, the state’s economy looks better now than it has in the last few years because of both sustained job and income growth since 2012.” The report predicted a 2.7 percent rate of growth for the first quarter of 2014.
Yet amid some promising signs, “there is a dark side,” said Tebaldi. “When we look at the unemployment rate of 9.2 percent, the highest in the nation for several months, we know that things are not that great,” he said. “We have a problem with the quality of our labor. For roughly two-thirds of our labor force, their highest degree is a high school diploma.
“Our labor-force level is about the same now as it was in mid-2002,” he said. “That means many people gave up looking for a job.”
But economic data doesn’t always tell the full story, says University of Rhode Island economist Leonard Lardaro. He produces a monthly Current Conditions Index with a dozen metrics that include unemployment rate, retail sales, manufacturing wages and hours, and single-unit housing permits.
“Anecdotal evidence says to me we’re doing better than the numbers would seem to indicate,” said Lardaro. “I’m just looking at traffic on Bald Hill Road in Warwick, the number of people in appliance stores, things like that. I don’t think that we’re doing as badly as the numbers say.
“I do think because Rhode Island hasn’t reinvented itself, we’re far too dependent on the national economy – but the national economy is going to be picking up, which should benefit Rhode Island,” he said.
An informal, anonymous survey of 350 business leaders at the Santander Bank and Greater Providence Chamber of Commerce Economic Outlook Breakfast on March 6 revealed that 90 percent of the group anticipated the U.S. economy will improve in the next 12 months. About half said they think the Ocean State economy will be about the same a year from now and one-quarter said they anticipate it will improve in the coming year.
“We do have positive things going, but on too small of a scale to help,” said Lardaro.
“Technology, for instance, startup firms and the design characteristics from the [Rhode island School of Design] people – that probably is our biggest strength,” said Lardaro. “The technology related to design is really a niche we have.” •

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