How Is Rhode Island’s Economy Performing - Experts Have a Lot of Opinions

How Is Rhode Island’s Economy Performing - Experts Have a Lot of Opinions

In recent days, three different reports have been issued about the state of Rhode Island’s economy, and they are all different and, in some cases, significantly different.

Add into account that some bad business stories in Rhode Island have yet to hit the data.

CVS announced this month that it is laying off 632 employees who work out of its Woonsocket headquarters. Hasbro announced last week about 100 layoffs, but we do not know how many of those are Rhode Island-based or when those cuts take effect.

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The national data appears to be robust. On Wednesday, the federal data showed that inflation-adjusted gross domestic product increased at 2.8% annually, driven by solid consumer spending. 

But, in Rhode Island, the state of the economy is more complex.

 

Mixed Bag Says RIPEC

Rhode Island’s economy showed mixed performance across key indicators in the third quarter of 2024, according to the Rhode Island Key Performance Indicators (KPI) Briefing, released Wednesday by The Center for Global and Regional Economic Studies at Bryant University and the Rhode Island Public Expenditure Council (RIPEC).

The report claims that Rhode Island saw “robust growth” in its labor force participation rate, which grew for the sixth straight quarter in Q3 and is now at 65.2%—higher than New England’s rate (65.0%) and, by a much larger margin, the U.S. rate (62.7%). Rhode Island also experienced an increase in net sales tax receipts—an indicator of aggregate demand—of 2.4% (seasonally adjusted) in Q3, while the number of employed Rhode Islanders rose by 1,200 (0.2%).

 

RI’s Unemployment Higher than New England and the Country

At the same time, the RI’s unemployment rate ticked up for the fifth straight quarter in Q3 2024, reaching 4.6%—higher than the U.S. (4.2%) and markedly higher than the region (3.4%). Rhode Island non-farm employment (Rhode Island-based jobs) fell by 1,800 quarter-over-quarter in Q3 2024 but was up 5,300 jobs year-over-year.

“In Q3 2024, Rhode Island’s economy exhibited both resilience and emerging challenges,” said Edinaldo Tebaldi, Vice President of Strategy and Institutional Effectiveness and Professor of Economics at Bryant University. “Labor force participation continued its upward trend, reaching a nine-year high and signaling a strengthened workforce foundation. Employment also grew, accompanied by rising consumer demand as reflected in increased sales tax receipts. However, the rise in unemployment for the fifth consecutive quarter and a slight decline in non-farm jobs highlight areas of concern within the labor market. These indicators suggest that while Rhode Island’s economy has potential for continued growth, labor market dynamics and a gradually increasing unemployment rate will require strategic attention to fully leverage the state’s economic momentum.”

 

Lardaro’s Monthly CCI

According to URI economics professor Leonard Lardaro, who released his August report on October 18, the Rhode Island economy is building momentum.

“The August value of 75 is slightly improved over the July value of 67, but looking "under the hood," there remains a healthy amount of strength. While several indicators are weakening, it is essential to note that the CCI this year has exceeded its year-earlier value for all but one month, indicating that we continue to build on our momentum from 2023,” said Lardaro.

Lardaro’s CCI report states, “Looking inside the numbers, even though the CCI was 75 this month, below its recent high of 83 in June, there were a number of strong indicator performances, many of which have been sustained for months now. Overall, nine of the twelve indicators contained in the CCI improved in August relative to a year ago. Most notable among these was the continuing uptrend in three indicators.”

The report adds, “Our Labor Force has now increased on a yearly basis at a nearly 3 percent rate since May, something I never thought we would see again. The labor force participation rate, the percentage of the resident population in the labor force, remained above 65 percent in August for only the third time since May of 2015. Wow! Let me repeat what I have been stating for months now: This trend makes the recent increases in our state’s Unemployment Rate nowhere near as negative as they first appear or what would have been the case had the Labor Force still been declining. Recent jobless rates above 4 percent are where we have realistically been for quite some time. The past strings of sub-4 values were merely statistical artifacts of low labor force participation that has now (thankfully) ended.”

 

 

Top Job Market Nationally

Also on Wednesday, WalletHub released a report ranking Rhode Island as the eighth-best job market in the U.S.

WalletHub compared the 50 states across 34 key indicators of job-market strength and economic vitality. The data set ranges from employment growth to the median annual income to the average commute time.

Rhode Island ranked 8th, and five New England states were ranked in the top ten, but the entire Northeast did not perform well. Wallethub ranks New York 41st.

 

See the full ranking below.