ECONOMIC DEVELOPMENT

Report: Slow economic growth predicted for R.I. through 2016

THE NEW ENGLAND ECONOMIC PARTNERSHIP'S 2012 Fall Forecast predicted slow growth in Rhode Island for the next four years as the state deals with high unemployment, budgetary problems and slow job growth.
Posted 12/5/12

BOSTON – Even though Rhode Island’s economy has shown mixed signs of improvement in 2012, the state’s economic outlook has not changed significantly in recent months, according to a report from the New England Economic Partnership.

The report, released Wednesday, pointed to Rhode Island’s positives: an increase in net general sales and gross receipt taxes that is indicative of increased spending in the Ocean State, a sign of improved overall economic conditions in the state.

Rhode Island’s employment numbers have also improved in recent months, with job numbers in construction, manufacturing, leisure and hospitality, and financial services higher than they were during the same period in 2011.

Despite declining jobless numbers, Rhode Island still has the second highest unemployment rate in the country, behind Nevada, and the NEEP 2012 fall forecast predicted that the state’s unemployment rate would remain greater than 10 percent until the third quarter of 2013.

“Job creation is expected to be slow in 2013 and 2014, which will keep the unemployment rate above 10 percent until the end of 2013,” said the report, which forecast that the state’s unemployment rate is expected to be 9.1 percent in 2014 and reach 6.9 percent in 2016.

The New England region as a whole fared slightly better than Rhode Island in NEEP’s forecast, which projected the region’s unemployment numbers to reach 6.8 percent in late 2013 and 5.8 percent by mid-2015.

Compared to NEEP’s spring forecast of the Rhode Island economy, the fall report showed no major changes in employment trends for information services, professional and business services, education and health services, leisure and hospitality, or high-tech. “These sectors will not add a significant number of jobs in 2012 or in the first half of 2013, but the forecast suggests that job creation will slowly pick up in the second half of 2013.”

From 2012 to 2016, most Rhode Island jobs are expected to be created in leisure and hospitality, high-tech, professional and business services, education, state and local governments, health services, and financial activities. The forecast expects retail, warehousing and utilities, information, wholesale trade and transportation to add very few jobs in Rhode Island over the same period.

“The job market issue is compounded when businesses cannot find workers with the right skills to fill openings. Rhode Island’s population is aging with more baby boomers getting ready to retire. In the near future, this will be an even more serious problem, because those leaving the workforce will have to be replaced by workers with specialized skill sets,” said the report.

If Congress fails to agree on budget changes and the United States falls over the so-called “fiscal cliff,” Rhode Island’s already high unemployment rate will likely get worse, according to the report. The American Action Forum estimated that Rhode Island would lose between 9,745 and 34,805 jobs, many in the defense industry as government contracts are reduced or canceled.

In fact, Moody’s Analytics said that Rhode Island, Connecticut, Vermont and Massachusetts will be among the seven states most negatively impacted due to the fiscal cliff.

“While the likelihood of going completely over the fiscal cliff is low, the projected state employment percentage declines highlight how significantly federal policy and slow action on addressing longer term fiscal concerns could impact the New England state economies,” said NEEP’s New England regional report.

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