Briefing for R.I.’s fourth quarter shows a stalling state economy
February 10th, 2012
SMITHFIELD, R.I. — The Rhode Island Current Economic Indicator (CEI) for the fourth quarter of 2011 indicates that the state has lost most of the economic momentum experienced in the first two quarters of 2011.
According to a briefing released today by Bryant University and the Rhode Island Public Expenditure Council (RIPEC), the CEI for the fourth quarter increased only 0.7 (annualized) - roughly the same increase seen in the third quarter and significantly lower than the 2.6 percent in the second quarter. In addition, projections show that the state's economy will expand just 0.9 percent in the second quarter of 2012.
"The data show that Rhode Island's economic woes have been very difficult to overcome and that recovery will not be smooth or straightforward," said John Simmons, executive director of RIPEC. "If the pace of economic growth does not accelerate soon, employment creation will stagnate and unemployment will stay high in 2012."
The internal dynamics of Rhode Island's fourth-quarter economy were partially offset by economic expansion in New England and the rest of the nation. The U.S. Gross Domestic Product (GDP) increased at an annualized rate of 2.75 percent in the fourth quarter of 2011, compared to 1.8 percent in the third quarter of 2011. According to the Regional Current Economic Indicator, the New England economy increased at an annualized rate of 2 percent in the fourth quarter of 2011, compared to 1.8 percent in the third quarter. This pattern of growth at which Rhode Island's economy grows slower than New England and the nation has been persistent during the last decade and must be reversed in the short term if the state wants to provide a economic environment at which both residents and businesses can thrive.
The briefing also included these findings:
- Employment in trade, transportation, and utilities services decreased 4.4 percent and 4.1 percent (annualized rate) in the third and fourth quarters, respectively;
- Employment in leisure and hospitality services decreased 6 percent in the second half of 2011;
- Signs of deceleration also are observed in professional and business services;
- Employment in construction continued its unexpected recovery, increasing 23.7 percent (annualized rate) in the fourth quarter, compared to an increase of 6.3 percent in the third quarter of 2011;
- Revised figures show that real total wages and salary disbursements decreased 3.3 percent in the third quarter of 2011, compared to an increase of 1.2 percent in the fourth of 2011;
- Seasonally adjusted initial unemployment claims decreased 2.5 percent in the fourth quarter compared to an increase of 18.2 percent in the third quarter of 2011;
- General sales and gross receipt taxes, a proxy for the state aggregate demand, increased 1.7 percent (seasonally adjusted) in the fourth quarter compared to an increase of 0.3 percent in the third quarter and 3 percent in the second quarter of 2011.
The quarterly CEI, developed by economists 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, assistant professor of economics at Bryant University, at firstname.lastname@example.org.
A .pdf of the briefing is available here.