PROVIDENCE, R.I. (February 2014) – The Rhode Island Current Economic Indicator (CEI) was revised upward in the third quarter of 2013, expanding at an annual rate of 2.7 percent. Rhode Island’s economy grew at an annual rate of 3.0 percent in the fourth quarter of 2013, and is projected to expand at an annual rate of 2.7 percent in the first quarter of 2014.
According to a briefing released today by The Center for Global and Regional Economic Studies and the Rhode Island Public Expenditure Council (RIPEC), growth in the second half of 2013 was faster than originally predicted. The 2013 third quarter overall CEI was revised up from 2.2 percent growth to 2.7 percent, and the 2013 fourth quarter CEI grew at a faster-than-expected rate (3.0 versus the anticipated 2.4 percent). This increase was chiefly driven by better than anticipated employment statistics in industries such as leisure and hospitality, and national economic improvements (third quarter national gross domestic product grew at a 4.1 percent annualized rate). However, the fourth quarter ended with worse than expected wage and salary disbursements.
The state’s economic expansion sustained momentum during the fourth quarter of 2013 and is predicted to continue in the first quarter of 2014. The observed fourth quarter growth is a combination of internal indicators including increases in total wages and salaries disbursements, and employment growth in some sectors of the economy. For example, negative third quarter growth in general sales and gross receipt tax revenue was offset by positive employment growth in construction, leisure and hospitality, and professional and business services. Moreover, positive national economic conditions such as U.S. GDP may be contributing to Rhode Island’s positive fourth quarter growth.
While recent trends suggest that Rhode Island has been able to sustain short-term growth, John Simmons, Executive Director of the Rhode Island Public Expenditure Council remarked, that “the state’s biggest economic challenges continue to lie with its changing labor force, misalignment of labor supply and demand, and long-term structural deficits. In addition to focusing attention on these challenges, the state must strategically plan to develop ways in which it can nourish high-paying industries and their associated jobs.”
The quarterly CEI, developed by economists at The Center for Global and Regional Economic Studies 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.
For additional information about the RI CEI or the newsletter, contact Edinaldo Tebaldi, associate professor of economics at Bryant University, at etebaldi@bryant.edu.
