Rhode Island’s Economy is Projected to Shrink in the Second Quarter of 2016 at an Annualized Rate of 1.2 percent
This story originally appeared on www.whatsuprhodeisland.com.
Rhode Island’s economy is shrinking, according to the latest economic briefing from the Rhode Island Public Expenditure Council and Center for Global and Regional Economic Studies at Bryant University, a major shift in its position from May.
The position is also consistent with the Current Conditions Index that is published monthly by University of Rhode Island Economist Leonard Lardaro. Lardaro’s index has consistently shown an economy this year that is far behind a year ago, and as of June was contracting.
John Simmons, RIPEC executive director, has also said, and it is reiterated in the recently released briefing, that RIPEC and Bryant downgraded its previous reports over the last three quarters.
The RIPEC/Bryant index, dubbed the Rhode Island Current Economic Indicator, says the economic slowdown “is consistent with regional trends, as growth has slowed in New England as a whole.”
The New England economy grew at an annualized rate of 0.4 percent during the second quarter of 2016, while, according to the RPIEC/Bryant briefing, the Rhode Island economy is “projected to shrink in the second quarter of 2016 at an annualized rate of 1.2 percent.” Nationally, RIPEC said, Gross Domestic Product is increasing at an annual rate of 1.2 percent, more robust growth than in the two previous quarters.
Projected negative growth in the second quarter is causing a significant widening “growth gap” between Rhode Island the rest of the nation, according to the RIPEC/Bryant report.
Lardaro’s index reached a low point in April this year, and again in June. At 42 it means our economy is contracting. Below 50, Lardaro said, means the economy is contracting, and above 50 it’s expanding.
“While Rhode Island’s first quarter performance was fair at best, in the second quarter things got decidedly worse,” Lardaro said.
“The question now for Rhode Island is whether our monthly performance will improve or deteriorate for the remainder of this year,” he said. “In other words, has our previous cyclical momentum disappeared?”
Perhaps alarming in the RIPEC/Bryant report is the observation that employment in construction declined 26 percent in the second quarter, at a time that is “typically among the busiest for the construction industry.”
And Simmons, in answer to a question, said at least in the early going the massive road and bridge improvement project that had promised to bring work and jobs to Rhode Island, only about 40 percent of those jobs are going to Rhode Islanders.
Both the RIPEC/Bryant and Lardaro’s index pin hope for the Rhode Island’s future economic growth on an improving national economy. Rhode Island has always lagged behind in economic growth, but has followed national trends.
Meanwhile, Governor Raimondo introduced a year ago – with legislative approval – a number of initiatives aimed at improving the state’s economy. Simmons said it’s too early to determine whether these initiatives will significantly improve the state’s economy.
One area that has kicked in is the Infrastructure Bank that was proposed by the governor and General Treasurer Seth Magazine and approved by the legislature. At last report from the treasurer’s office several projects are now underway, with the focus on energy related projects.