Economist Nicholas S. Perna knows the business climate in New England better than most. An economic adviser to Webster Bank since 2002, he is also the president of Perna Associates, a consulting firm specializing in economic forecasting, strategy and analysis.
He says the Great Depression and the Great Recession are similar in their root causes of financial chaos. As such, recovery will take far longer in the current case for many sufferers, including Rhode Island, than is common with recessions.
“Fiscal stability must be restored,” he told Providence Business News. “It’s a fundamental prerequisite to restore growth in any state.”
It’s a message Perna was expected to share with business leaders on May 3 during the luncheon keynote address at the Rhode Island Business Expo.
PBN: In Rhode Island, the jobless rate went up in March to 11.1 percent. In Massachusetts, the rate is 6.5 percent. Why the disparity?
PERNA: It’s not only a problem, it’s sad to see it; there’s a human side to unemployment.
Seven years ago jobs were growing and house prices were rising, but there wasn’t enough underneath it to sustain it. When the national recession hit, Rhode Island got hit hard.
In Massachusetts seven years ago, state and local budgets were in better shape than Rhode Island, so they didn’t have to do the cutting that needed to be done in Rhode Island. One of the big contributors in Rhode Island is local fiscal problems, which make it hard to get out of a recession. It’s also hard to attract people to your state or keep them there when there’s so much fiscal uncertainty.
PBN: Rhode Island’s economic plan includes attracting technology-driven industries and promoting small, entrepreneurial businesses. Is this a valid plan?
PERNA: Massachusetts has a portfolio of business that is much more growth-oriented than Rhode Island. Education and medicine is on everyone’s list of where to grow. It’s a bigger proportion of the Massachusetts economy than Rhode Island’s but part of that is due to luck because Massachusetts was fortunate to have so much technological development along Route 128.