Presentation on theme: "The Rhode Island Economic Outlook Edinaldo Tebaldi, Ph.D. Assistant Professor of Economics RI co-forecast manager - NEEP."— Presentation transcript:
The Rhode Island Economic Outlook Edinaldo Tebaldi, Ph.D. Assistant Professor of Economics RI co-forecast manager - NEEP
Changes in Nonfarm Employment, Rhode Island (thousands) Significant job losses since Feb/07 Source: U.S. Bureau of Labor Statistics NEEP forecasts that 5,000 jobs will be lost until mid-2010 39,500 jobs have been lost since the recession began
The Great Recession Current economic conditions in RI are significantly worse than that in the 1970s, 1980s, 1990s and early 2000ss recessions Source: New England Economic Partnership (NEEP) Unemployment Rates Forecast
Missing the late 1980s? State Unemployment Rate, 2009 Poverty Rates Population Growth 2003-2008 Real GDP (2003-2008) Annual average United States10.213.24.69%2.25% Connecticut22.214.171.124%2.06% Maine8.2121.00%1.47% Massachusetts8.911.30.92%2.02% New Hampshire6.872.57%1.85% Rhode Island12.912.7-2.04%0.86% Vermont6.590.68%1.93% State Unemployment Rate, 1990 (average) Poverty Rates, 1990 Population Growth 1985-1990 Real GDP 1985-1990 Annual average United States5.6213.54.53%2.5% Connecticut4.962.69%4.2% Maine5.2813.15.59%3.9% Massachusetts6.3310.72.31%2.6% New Hampshire5.656.311.29%3.2% Rhode Island126.96.36.199%3.2% Vermont4.9210.96.17%5.2% Current Low unemployment Low poverty rate Strong pop. Growth Strong GDP growth Low unemployment Low poverty rate Strong pop. Growth Strong GDP growth High unemployment High poverty rate Population shrinking Weak GDP growth High unemployment High poverty rate Population shrinking Weak GDP growth
The current recession made RIs fundamental economic problems more noticeable… but the states failure to create new jobs is not a new problem Source: New England Economic Partnership (NEEP), U.S. Bureau of Labor Statistics RI Share of US employment Total employment knowledge-based economy Forecast
How Did We Get Here? Attracting and Retaining People and Businesses InfrastructureTaxes Individual Good school system Quality in public services Health Care quality Arts, Leisure, and natural resources State income tax Capital gain taxes Estate taxes Sales taxes Business Qualified labor force Access to Ports, Airports, connected highways Access to an expedited business permit/license process Institutional support for small business and for promoting access to global markets Corporate taxes Tax Incentives Manageable tax system
How did we get here? Rhode Island failed to provide competitive tax and regulatory systems, negatively affecting the incentives for attracting and retaining people and businesses and promoting economic growth.
The State Ranks Poorly in Key Indicators State Best State For Business, 2006 Best State For Business, 2009 Regulatory Environment 2009 a Economic Climate 2009 b Business Costs 2009 c Labor 2009 d Growth Prospects 2009 d Quality Of Life 2009 e New Hampshire2019462641554 Massachusetts363422334816402 Connecticut333533314518373 Maine4641323944252819 Vermont364744494313429 Rhode Island4550 4840351821 Source: Forbes a Measures regulatory and tort climate, incentives, transportation and bond ratings. b Reflects job, income and gross state product growth as well as unemployment and presence of big companies. c Index based on cost of labor, energy and taxes. d Measures educational attainment, net migration and projected population growth. e Reflects projected job, income and GDP growth as well as business openings/closings and venture capital investments. e Index of schools, health, crime, cost of living and poverty rates.
State-Local Tax Burden, 1977-2008 Source: Tax Foundation RI
Small Business Survival Index, 2007 StateRanking New Hampshire23 Connecticut38 Vermont43 Massachusetts44 Maine47 Rhode Island48 Source: Small Business Entrepreneurship Council
…and more bad indicators IndicatorSourceRank Utilization of digital technologies in state governmentsKauffman41 Technology in SchoolsKauffman45 Per Capita State Appropriations for Higher EducationMilken45 % university R&D from State and local gov'town41 % university R&D from Industryown40 Source: Authors compilation
But we should not overlook the states strengths: Rhode Island Has strong Science & Technology Indicators IndicatorSource RI Ranking RI Score US Average Score 2008 Business Climate For Technology-based Activity High-Tech Industries with I.Q. Higher than 1.0Milken Institute119- State Technology and Science IndexMilken Institute1066.6954 Technology Concentration and DynamismMilken Institute1366.4454 Industry Investment in R&DKauffman35.233.31 R&D Inputs Composite IndexMilken Institute672.44- Cyberinfrastructure Broadband TelecommunicationsKauffman28.75 Health ITKauffman29.11.9 Internet Domain NamesKauffman303.525.09 Online PopulationKauffman2772.4871.67 Source: Authors compilation
Rhode Islands has a significant pool of well-qualified workers IndicatorSourceRankingScore US Average Score Science & Technology Workforce Human Capital Investment CompositeMilken Institute1562.152 Immigration of Knowledge WorkersKauffman231211.4 IT ProfessionalsKauffman251.251.37 Migration of US Knowledge WorkersKauffman614.113.1 Percent of Age 25+ with Bachelors or higherMilken Institute150.31- Percent of Age 25+ with PhDMilken Institute290.01- S&T work force composite indexMilken Institute1368.3156 University Based S&T Research Percent of Bachelor Degrees in Sci & engMilken Institute180.17- Percent of Grad Students in Sci & EngMilken Institute100.02- Recent PHD Degrees in Sci & Eng per 1,000 workersMilken Institute100.3- Scientists and Engineers as a % of workforceKauffman50.490.34 % university R&D from Institution fundsown1327%20% Source: Authors compilation
Attracting and Retaining People and Businesses InfrastructureTaxes Individual Good school system Quality in public services Health Care quality Arts, Leisure, and natural resources State income tax Capital gain taxes Estate taxes Sales taxes Business Qualified labor force Access to Ports, Airports, connected highways Access to an expedited business permit/license process Institutional support for Small business and for promoting access to global markets Corporate taxes Tax Incentives Manageable tax system The State needs a comprehensive plan to: Address its weaknesses; Build upon its strengths; The State needs a comprehensive plan to: Address its weaknesses; Build upon its strengths;