AFTER A REVISED DROP in growth during the fourth quarter of 2012, the state's economic activity grew at an annual rate of 1.6 percent during the first quarter of 2013 and is expected to grow at an annualized rate of 1.8 percent during the second quarter.
COURTESY BRYANT UNIVERSITY AND THE R.I. PUBLIC EXPENTITURE COUNCIL
PROVIDENCE – The Rhode Island Current Economic Indicator Index, released by the R.I. Public Expenditure Council and Bryant University’s Center for Global and Regional Economic Studies on Monday, reported that Rhode Island economic growth expanded at a more robust rate than estimated during the first quarter of 2013.
The quarterly CEI combines several “key gauges of economic activity” in a single statistic to measure the overall current economic conditions in Rhode Island. It is calibrated to grow at the rate of the real gross state product and can be interpreted as the underlying growth rate of the state economy, according to RIPEC and the Center for Global and Regional Economic Studies.
After revising the fourth quarter 2012 indicator downward, the report said estimates for the first quarter of 2013 indicate that the state experienced “more robust growth than previously predicted,” with an annualized growth rate of 1.6 percent, compared with the 1.1 percent expansion projected for the first quarter during the year-end 2012 report.
Not only was Rhode Island’s growth in the first quarter faster than originally predicted, but the report projected continued economic expansion during the second quarter.
The report’s leading indicator, which projects the state’s economic growth rate in the next quarter, estimated that the Rhode Island economy with continue to increase at an annualized rate of 1.8 percent during the second quarter of 2013.
The projected growth was attributed to a combination of “internal factors,” including increases in employment in “key industries” and increasing tax revenues, as well as a number of “external factors,” including economic expansion both in New England and the rest of the United States.
“Despite the positive economic momentum in the beginning of 2013, growth continues to be well below levels needed to call a recovery and the state continues to struggle with a number of internal dynamics such as a shrinking labor force and weak construction and manufacturing industries,” said the report.
The report said that since 2007, Rhode Island’s economy has been growing more slowly than both the New England and national economies, indicating that “the state’s sluggish economy is not a short-term problem.”
“The data is clear on this point, Rhode Island faces structural economic issues that must be addressed if the state is be competitive in today’s economic climate,” John Simmons, executive director of RIPEC, said in prepared remarks.
The report said that while key economic indicators such as unemployment and personal income growth are showing positive movement in the Ocean State, estimates continue to show “constrained” economic growth.
The report pointed toward the state’s recently released employment data, which showed a continued drop in the state’s unemployment rate as well as a declining labor force, and revenue estimates for the 2013 and 2014 fiscal years that were lower than November estimates, reflecting “both the economic contraction in the last quarter of 2012, and questions about the state’s growth prospects.”
During the first quarter of 2013, six of the seven internal factors positively affected the state’s CEI: general sales and gross receipts taxes increased as initial unemployment claims declined. Also, while construction employment continued to decline, the rate of decline slowed, and employment in all other sectors included in the CEI increased.
To view the full report from RIPEC and Bryant University, visit www.ripec.org.