Published 05/10/12

R.I. Current Economic Indicator: Q1 '12

SMITHFIELD, R.I.  (May 10, 2012) -- With very slow rates of economic growth, the state economy has been stuck since the first quarter of 2011, according to the Rhode Island Current Economic Indicator (CEI).

"The indicator signifies that Rhode Island's economy is stagnating, and that growth is predominantly the result of external factors, which are also showing signs of slowing."

John Simmons

According to a briefing released today by Bryant University's Center for Global and Regional Economic Studies and the Rhode Island Public Expenditure Council (RIPEC), the CEI for the first quarter of 2012 increased 1 percent (annualized rate).

"The indicator signifies that Rhode Island's economy is stagnating, and that growth is predominantly the result of external factors, which are also showing signs of slowing," said John Simmons, executive director of RIPEC. "While there are some positive signs, the question is whether the economic conditions in the state will continue to improve, and at what rate."

The Rhode Island Leading Economic Indicator projects the trend of the two-quarters ahead growth rate of the Rhode Island CEI. It indicates that the economy will grow at a pace slower than the current growth rate of 1 percent (annualized) in the third quarter of 2012, providing little hope that the state economy will turn around any time soon.

These figures suggest an increasing risk of double-dip recession in Rhode Island. To avert a return to recession or prolonged economic stagnation, state and local governments and businesses must engage in coordinated efforts to stimulate economy activity and promote economic growth in Rhode Island, the briefing states.

Rhode Island's economy continues to expand at a rate significantly slower than the regional and national average: The U.S. Gross Domestic Product increased at an annualized rate of 2.2 percent in the first quarter of 2012, and the New England economy expanded during the same quarter at an annualized rate of 3.3 percent.

The briefing also included these findings for the first quarter of 2012:

  • Employment in leisure and hospitality services decreased 2.5 percent, adding to the poor performance of leisure and hospitality since the third quarter of 2011;
  • The unexpected job creation that took place in construction in the fourth quarter of 2011 was eliminated. In fact, employment in construction decreased 24.2 percent (annualized rate) in the first quarter of 2012 compared to an increase of 23 percent in the fourth quarter of 2011;
  • The performance of the professional and business services and trade, transportation and utilities services industries improved slightly.

The CEI, developed by Bryant University's Center for Global and Regional Economic Studies, 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 briefing, contact Edinaldo Tebaldi, assistant professor of economics at Bryant University, at etebaldi@bryant.edu.

A .pdf of the briefing can be downloaded here.

(The Providence Journal of May 10 reported on this in a story headlined "Recession could take another dip, report says." The Providence Business News reported on the briefing online here)

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