Rhode Island Economic Growth Modest and Uneven in Second Quarter of 2013

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Rhode Island Economic Growth Modest and Uneven in Second Quarter of 2013

PROVIDENCE, R.I. (August 2013) – According to a Current Economic Indicator (CEI) briefing released today by The Center for Global and Regional Economic Studies and the Rhode Island Public Expenditure Council (RIPEC), growth in the first quarter of 2013 was faster than originally predicted, as Rhode Island’s economy grew by 1.9 percent, compared to an estimated 1.7 percent expansion. The CEI estimates that the state’s economy grew by 1.7 percent in Q2, and the leading indicator, which details future quarter growth rates, estimates Rhode Island’s economy will increase at an annualized rate of 1.6 percent in Q3 of 2013.  A copy of the full briefing is available here.

Despite recent critical economic gains, the state’s modest and inconsistent economic growth continues to be below levels requisite to deem a recovery. Recent U.S. Bureau of Economic Analysis revised estimates indicate that on an annual basis, the Rhode Island economy expanded 1.4 percent in 2012, 0.0 percent in 2011, and 1.0 percent in 2010. Moreover, Rhode Island’s growth has been slower than the New England and national economies since 2007, suggesting that the state’s sluggish economy is most challenged by internal dynamics such as a shrinking labor force and uneven growth in construction and manufacturing industries.

Although key indicators such as unemployment and general sales and gross receipts tax revenue have maintained positive trends, estimates continue to show constrained economic growth, which is further underscored by Rhode Island’s declining labor force and comparatively high unemployment rate.  The Rhode Island Department of Labor and Training’s (DLT) July data reported that the state’s labor force declined by 2,538 individuals—a 0.5 percent decline from the June 2013 labor force total. As a percentage of the prior month’s labor force total, this is the largest labor force decline since June 1983.

The quarterly CEI, developed by economists at The Center for Global and Regional Economic Studies at Bryant University, combines several key gauges of economic activity in a single statistic that measures the overall current economic conditions in Rhode Island. It is calibrated to grow at the rate of the Real Gross State Product and, therefore, can be interpreted as the underlying growth rate of the state economy. The CEI is calculated using the most current available data for the state.

For additional information about the RI CEI or the newsletter, contact Edinaldo Tebaldi, associate professor of economics at Bryant University, at etebaldi@bryant.edu