A Rhode Island economy that University of Rhode Island Economist Leonard Lardaro described as limping through 2019, is in a recession that promises to intensify as the state, nation and world struggles in its fight to defeat the coronavirus.
“We went into this crisis from a weakened position,” Lardaro said, leaving Rhode Island “very vulnerable.”
That vulnerability, Lardaro said, is because of the state’s reliance upon a tourism industry that has been decimated, and because of our older population. Rhode Island, according to the census bureau, ranks 14th as one of the nation’s oldest populations with 17.5 percent of the state’s residents 65 years old or older.
And Evan Smith, Discover Newport’s Executive Director, said the city’s tourism industry will lose tens, perhaps hundreds of millions of dollars.
That on top of what Lardaro said is what has been Rhode Island’s stagnant “real” Gross Domestic Product (GDP), which he said has been “flat since 2015.”
“It’s no doubt that we are in a recession,” Lardaro said. “This is a period of economic weakness across the economy. We are in contraction mode, very deep…an induced coma.”
As we spoke this morning (April 3), the U.S. Bureau of Labor Statistics released its March 12 numbers, reporting a loss of 701,000 jobs, seven times what was expected, Lardaro said. Of the lost jobs, 459,000 were reported in the leisure and hospitality industry that is so important to Rhode Island, crucial to Newport, and that has come to a virtual standstill.
Drive over the Jamestown and Newport Bridges there are always recreational boaters, and often a cruise ship sitting off Newport, near Goat Island. But not now. The first few of more than 100 cruise ships scheduled to visit Newport have been canceled. And while most ships are expected in the fall, there’s universal agreement that the cruise industry will have to remake itself.
Along the city’s waterfront, its vaunted restaurants, quirky bars, and boutique shops are shuttered. Hotels are empty and streets quiet.
Tourism is an industry that’s extremely important to Colin Kane, a founding partner of Peregrine Group Real Estate Advisory, developers of an 84-room boutique hotel, Hammetts Wharf, on the waterfront on Newport’s America’s Cup Avenue
The hotel, Kane said, was set to open on Memorial Day this year. Completion is now scheduled for mid-June, with retail businesses that will occupy some 3,000 square feet, likely not opening until next year.
Kane said the only certainty appears to be uncertainty.
He, along with Lardaro, feels Gov. Gina Raimondo has done a good job during this crisis, and Kane is equally complimentary of Newport’s government leadership.
“The city has performed very well,” he said. “These are good folks, smart, thoughtful that have just been dealt a bad set of cards.”
It’s the city officials who will be at the heart of reshaping the city’s economy. The challenges will be substantial.
Newport, like so many cities and towns across the country, will be faced with many small business closures, which Kane believes could reach 25 to 30 percent of small businesses. Lardaro and Smith, agreed.
Many of these shops, Kane said, “contribute mightily to the character of the neighborhood. Main Street businesses –barber shops, florists, micro businesses never expected to be ordered to shut down.”
But he believes in the nation’s resiliency, especially Newport.
“There’s a lot of character left in this country,” he said, with Newport poised to lead the recovery.
With a lot of wealth in the Northeast, and Newport a drivable city, the city should “hold its own,” as it did during the last recession. Instead of boarding airplanes, or cruise ships, Kane hopes and expects people will drive to a city that he describes as a “very very nice place.”