NEW: Report Says State’s Economic Recovery is Slowing
Wednesday, August 15, 2012
The Rhode Island Current Economic Indicator (CEI) for the second quarter of 2012 indicates Rhode Island’s economic growth slowed significantly over the first half of 2012. The leading CEI indicates that, at least in the short term, Rhode Island’s economic difficulties will continue.
According to a briefing released today by Bryant University and the Rhode Island Public Expenditure Council (RIPEC), the CEI for the second quarter of 2012 increased by just 0.4 percent (annualized), only slightly higher than the 0.3 percent growth rate the quarter prior (revised downward from 0.95 percent). The CEI for the third quarter projects continued lackluster growth of 0.5 percent.
“The data indicate that Rhode Island’s economy continues to struggle and there does not appear to be any relief in the short term” said John Simmons, executive director of RIPEC. “As such, the administration should take a proactive review of revenues to ensure the current budget remains balanced.’
Negative internal dynamics, coupled with a softening of the national and regional economy, have dampened Rhode Island’s economic growth prospects thus far in 2012. The U.S. Gross Domestic Product (GDP) increased at an annualized rate of 1.5 percent in the second quarter of 2012, compared to a rate of 2.0 percent in the first quarter. The regional CEI showed a significant slowing in economic expansion between the first and second quarters of 2012; growth in Q2 of 1.7 percent was just over half the rate of growth in Q1. Internally, employment in the trade, transportation and utilities sector and the professional and business services sector declined, despite picking up in the first quarter of 2012, and average weekly initial unemployment claims increased by 14.6 percent, after decreasing for two consecutive quarters.
In addition, the briefing includes the following findings:
· After declining for four quarters, seasonally adjusted leisure and hospitality employment increased by 2.5 percent in the second quarter of 2012.
· Construction employment increased in Q2 by 8.1 percent, compared to the quarter prior when employment declined by 23.7 percent.
· General sales and gross receipt taxes, a proxy for the state aggregate demand, decreased by 1.2 percent (seasonally adjusted) after five consecutive quarters of increases.
· Real (v. nominal) wages and salary declined by 3.7 percent (not annualized), compared to an 8.3 percent increase one year prior.
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.
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