Economic Forecast: RI Won’t Fully Recover by 2014
Wednesday, November 17, 2010
“The recession is over in most of the United States. Rhode Island is still having a difficult time,” said one of the economists, Ed Mazze, a professor of business administration at the University of Rhode Island. “We’re still not creating jobs. The median price of homes is going down. Bankruptcies are going up and it’s time for Rhode Island to have a solid economic plan to rebuild our economy.”
Mazze and Edinaldo Tebaldi, an economics professor at Bryant University, will present their findings at the Fall 2010 Economic Outlook Conference for the New England Economic Partnership, which is today in Boston.
Some sectors of the economy still mired in recession include education, health care, and housing, according to Mazze. On the upside, some areas are pulling out of the recession—leisure, hospitality, and the hi-tech industries.
2011 will be key year
A key indicator to watch is the double-digit employment rate that continues to hang over the state economy. “2011 is going to be a very critical year,” Mazze told GoLocalProv. “If we can’t get that double digit down to a single digit by the end of 2011 we stand a chance of going back into a recession.”
On the other hand, if the Bush tax cuts are extended, he said that will help improve business and consumer confidence. “Businesses are afraid to expand because they don’t see the customers,” Mazze said. “There are a lot of people waiting to spend money on things until they know their jobs are secure.”
Another problem: the state budget deficit, which will reach $350 million in fiscal year 2012, $400 million in 2013, and $500 million in 2014, according to Mazze and Tebaldi. “I think the deficit does have a major impact on business confidence,” Mazze said.
Rhode Island won’t recover all lost jobs
Even if the economy does recover, it won’t make up for all the jobs lost during the recession, according to the report.
“The NEEP forecast indicates that the state's Gross State Product will grow from 2010 to 2014. The growth rate will be smaller than the average growth rates in the New England region and in the nation,” Mazze and Tebaldi state. “The growth in Gross State Product will not be sufficient to re-create the jobs lost during the recession. Moreover, the potential benefits to the economy of modest growth in personal income will be offset by an expected high tax burden (state and local) causing real per capita disposable income to stay roughly constant from 2010 to 2014.
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