Report: Despite growth, R.I. recovery ‘still lags’

THE NEW ENGLAND ECONOMIC PARTNERSHIP'S 2013 forecast predicted that Rhode Island's economic growth would increase but still lag behind the region and the nation as a whole.
THE NEW ENGLAND ECONOMIC PARTNERSHIP'S 2013 forecast predicted that Rhode Island's economic growth would increase but still lag behind the region and the nation as a whole.

BOSTON – Even though Rhode Island has gained some economic strength in 2013, the Ocean State “still lags behind other states in New England when looking at major economic indicators such as growth of the gross state product and the unemployment rate,” according to the spring 2013 New England Economic Outlook report from the New England Economic Partnership.
Seven of the state’s 13 employment sectors experienced growth, including the struggling manufacturing sector, which added 400 new jobs.
Overall, the NEEP report said that the Rhode Island economy is “slowly regaining momentum,” something that’s indicated by the significant drop in unemployment from 10.6 percent in March 2012 to 9.1 percent in March 2013, a “robust increase” in taxes revenue and employment gains in what the report called “key industries.”
The report estimated that Rhode Island’s real gross state product, which measures the total economic output of the state, increased 1.8 percent in 2012. The state’s current economic indicator for the first quarter increased at an annual rate of 1.6 percent.
Comparing spring 2013 forecast with the fall 2012 forecast showed that the long-term forecast for both the unemployed rate and nonfarm employment improved, causing the unemployment rate to decrease much faster than expected in the fall of 2012. “The long-term outlook has, thus, improved,” said the report.
The state’s real gross state product is forecast to reach $44.9 billion in 2013, a 1.1 percent increase compared to the 2012 real GSP of $44.5 billion.
The report indicated that, by 2017, Rhode Island’s real GSP should be $49.7 billion, an annual growth rate of 2.2 percent between 2012 and 2017, compared with 0 percent growth between 2007 and 2012.
“This growth rate is, however, slower than the 3.2 percent growth rate for the New England area and the 3.3 percent for the United States,” said the report. The NEEP report also touched on job creation in the Ocean State, stating that between 2013 and 2016, most new jobs created in Rhode Island will be in construction, financial activities, professional and business services, leisure and hospitality, education and health services and high-tech.
The report indicated that there would be little growth in Rhode Island’s manufacturing, trade, transportation and utilities, information services and government employment.
Although the report projected that the Ocean State would grow jobs, it is not expected to recover the jobs lost during the recession by 2016. Rhode Island is the only New England state not expected to recover jobs lost during the forecasted period.
Median home prices are expected to increase to $243,300 by 2017, a forecasted growth rate of 3 percent between 2012 and 2017. Comparatively, the median price of a Rhode Island home from 2002 to 2007 grew 7.3 percent to $277,100 in 2007, but fell 5.4 percent between 2007 and 2012.
The population of the Ocean State is expected to increase slightly between 2012 and 2017 at 0.2 percent. This is compared with a 0.1 percent population decrease from 2007 to 2012.
Across New England as a whole, NEEP’s spring report Massachusetts and Vermont are experiencing the strongest recoveries from the so-called “Great Recession,” while Rhode Island and Maine continue to lag.
“Overall, the New England economy continues to be negatively affected by conditions outside the region’s borders,” said the report. “This includes weaknesses and vulnerabilities in the European economy and the fiscal drag from sequestration of federal funding.
NEEP’s spring 2013 forecast is based on the Moody’s Analytics United States March baseline forecast. According to the report, Moody’s baseline is “reflective of the prospects for the national economy.”
The forecast for the New England region is that the economy will continue to grow slowly, with employment growth averaging 1.4 percent annually and overall regional gross product averaging 3.3 percent growth through 2015.
“With the expected slow growth, the region is not expected to return to its pre-recession employment level until 2015 and the unemployment rate in the regional, while remaining less than the U.S. average, is not expected to be below 6 percent until 2015,” said the report. Although the housing markets in both New England and across the nation “continue to emerge as a positive driver in the economy,” projected gains in housing prices in the region are expected to be “relatively modest.”
According to the report, among the New England states, only Vermont is expected to have housing prices return to pre-recession levels within NEEP’s forecasted period.
New England’s overall economic growth is expected to remain low, “especially for a recovery from a recession,” said the report. The gross regional product annualized growth is expected to remain below 3 percent until the end of 2013. After peaking at 4.5 percent at the end of 2014, overall New England gross is expected to decline.
The NEEP report also contained a special section based on the conference theme “Manufacturing is Changing – Is New England Ready?”
According to the report, for three decades, manufacturing employment has been in decline both nationwide and regionally, though New England’s decline has been 50 percent more pronounced than the nation’s.
The report said if the manufacturing industry in the region were to “turn around,” it could have a “significant positive influence” on New England’s economic outlook.
Within the New England region, Rhode Island has experienced the most pronounced manufacturing employment decline, said the NEEP report. The Ocean State has lost roughly 7 out of every 10 manufacturing jobs in the last 30 years.

NEEP’s economic forecasters estimated that New England’s manufacturing employment will rise 1.3 percent between 2012 and 2016. This would add roughly 7,000 manufacturing jobs in the region in the projected period.

While the report called the gain “very modest,” it said it represents a turnaround from the previous six years, when New England loss 115,000 manufacturing jobs.

“To grow manufacturing … will require linking manufacturing more strongly to research and development strengths in the region, and ensuring an appropriately skilled workforce for advanced manufacturing across the region,” said the report.

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To view the full NEEP reports, visit: www.newenglandcouncil.com.

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