The Rhode Island Economy is Picking Up Steam - Q1 2016

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The Rhode Island Economy is Picking Up Steam - Q1 2016

PROVIDENCE (May 2016) – According to the Rhode Island Current Economic Indicator (CEI) briefing released today by the Center for Global and Regional Economic Studies at Bryant University and the Rhode Island Public Expenditure Council (RIPEC), growth of the Rhode Island economy has been slightly stronger over the last four quarters than observed in previous years and slightly faster than the growth observed in the New England region.  Rhode Island’s economy grew at an annualized rate of 3.0 percent in the first quarter of 2016, compared to an expansion of 2.9 percent in the fourth quarter, 2.1 percent in the third quarter, and 3.9 percent in the second quarter of 2015.  The New England economy, in contrast, grew at an annualized rate of 2.6 percent in the first quarter of 2016, compared to 2.1 percent in the fourth quarter of 2015 and 2.0 percent in the third quarter.  The Rhode Island Leading Economic Indicator projects that the state economy will expand at an annualized rate of 2.7 percent in the second quarter of 2016.  The full briefing is available here.

Seven of the eleven internal factors that comprise the Rhode Island CEI positively affected economic growth in the first quarter of 2016, including general sales and gross receipt taxes (a proxy for aggregate demand); real total wages and salary disbursements; employment in manufacturing; employment in professional and business services; employment in financial services; employment in leisure and hospitality; and employment in construction.

Four of the eleven internal factors negatively affected the Rhode Island CEI in the first quarter of 2016, including employment in education and health services, the largest industry in the state; employment in information services; employment in trade, transportation and utilities services; and initial unemployment claims, which increased by 9.2 percent this quarter.

“Rhode Island’s economy is showing signs of continued growth, with certain segments of the labor market performing reasonably well,” remarked John C. Simmons, Executive Director of RIPEC.  Simmons added, “It is encouraging that growth over the last year was stronger than we’ve observed previously.  But despite recent performance, the state has been unable to close the persistent ‘growth gap’ that has existed between Rhode Island and both the New England region and the country as a whole since the Great Recession ended in 2009.  This long-term trend of slow growth in the state suggests that structural issues continue to slow economic expansion in Rhode Island.”

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 an estimate of the 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.