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Economic Overview for Rhode Island and the Region

Economic Overview for Rhode Island and the Region. Robert Tannenwald, Director New England Public Policy Center Federal Reserve Bank of Boston Presented to the Rhode Island House Speaker’s Economic Summit December 1, 2009 The views expressed in this presentation are not necessarily those

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Economic Overview for Rhode Island and the Region

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  1. Economic Overview for Rhode Island and the Region Robert Tannenwald, Director New England Public Policy Center Federal Reserve Bank of Boston Presented to the Rhode Island House Speaker’s Economic Summit December 1, 2009 The views expressed in this presentation are not necessarily those of the Federal Reserve Bank of Boston or the Federal Reserve System.

  2. Areas of Focus • Unemployment, Employment and Overall Growth • Housing • Prices and Consumer Confidence • New England Fiscal Situation

  3. New England has been through rough times before……..

  4. Boston Sports Index Red Sox 2007 WS Champs Index 1920=1 (Babe Ruth traded to the Yankees, the curse begins) Celtic’s Champs Celtics Reign of Terror (57-69) Red Sox come back to beat Yankees in ALCS and win WS Multiple Bruins and Celtics Championships Patriots Super Bowl Wins Pats 16-0 and no Super Bowl Brady’s Back! Brady Out Red Sox Playoff Loses Yankees win Game 7 ALCS with walk-off homerun Buckner! Notes: Red Sox given favorable weights.

  5. Areas of Focus • Unemployment, Employment, and Overall Growth • Housing • Prices and Consumer Confidence • New England Fiscal Situation

  6. Unemployment rates have increased more rapidly in Rhode Island than the region or nation Percent Through Oct, 2009 Rhode Island United States New England Source: U.S. Bureau of Labor Statistics. Note: Data are seasonally adjusted.

  7. Unemployment Rates Source: U.S. Bureau of Labor Statistics

  8. Year-over-year employment growth has fallen more sharply in Rhode Island than the region or nation Percent Change from Year Earlier Through Oct, 2009 United States Rhode Island New England Source: U.S. Bureau of Labor Statistics. Note: Data are seasonally adjusted.

  9. Total Employment Through October 2009 NH MA ME VT CT US RI Index: Each state’s pre-recession peak is equal to 1. Source: Bureau of Labor Statistics

  10. MYTH #1 Rhode Island’s employees have not gained in productivity to the extent of their counterparts in Massachusetts and Rhode Island

  11. State Economic Activity Indexes Index: Each state’s pre-recession peak is equal to 1. Through Oct, 2009 NH US MA VT CT ME RI Note: The economic activity indexes include four indicators: non-farm employment, the unemployment rate, average weekly hours worked in manufacturing, and wage and salary disbursements. The trend for each state’s index is set to match the trend for its gross domestic product (available annually). Sources: Federal Reserve Bank of Philadelphia and the Bureau of Labor Statistics

  12. Employment growth by industry: the pain is widespread Percent Change, October 2008 to October 2009 Source: U.S. Bureau of Labor Statistics. Note: Data are seasonally adjusted.

  13. MYTH #2 Rhode Island’s employment lags because, unlike in Massachusetts and other states, it hasn’t kept up in education and health services

  14. Areas of Focus • Unemploment, Employment, and Overall Growth • Housing • Prices and Consumer Confidence • New England Fiscal Situation

  15. Foreclosure Rates Percent of loans with foreclosure initiation in quarter Through Q3, 2009 Rhode Island United States New England Source: Mortgage Bankers Association, Haver Analytics.

  16. Foreclosures Initiated Percent of Total Mortgages Percent Through Q3, 2009 Vermont Source: Mortgage Bankers Association

  17. Housing prices rose more steeply in Rhode Island and New England than the U.S. and began to fall sooner Percent Change from Year Earlier Through Q3, 2009 FHFA Home Price Index Not Seasonally Adjusted, 1980 Q1 = 100 Rhode Island New England United States Source: Federal Housing Finance Agency.

  18. Housing construction: New England did not experience the same build-up as U.S. overall; Rhode Island fell earlier Single-Unit Housing Permits Authorized Index, June 1995 = 1 Through Sep, 2009 United States New England Rhode Island

  19. The slowing of the housing market is also evidenced by the drop in existing home sales Index, 1990 Q1 = 1 Through Q3, 2009 Rhode Island New England CT+ME+MA+RI United States Source: National Association of Realtors.

  20. Areas of Focus • Unemployment, Employment, and Overall Growth • Housing • Prices and Consumer Confidence • New England Fiscal Situation

  21. After a few months of decline, prices are beginning to move upward again. Percent Change from Year Earlier Through Oct, 2009 Consumer Price Index – All Urban Consumers Boston Area United States Source: U.S. Bureau of Labor Statistics.

  22. Consumer confidence has fallen dramatically over the last year and a half and remains low, but appears to be on the rebound Index, 1985 = 1 Through Oct, 2009 United States New England Source: Conference Board, Haver Analytics.

  23. Areas of Focus • Unemployment, Employment and Overall Growth • Housing • Prices and Consumer Confidence • New England Fiscal Situation

  24. Source: New England Public Policy Center at the Federal Reserve Bank of Boston, based on monthly revenue statements from respective state revenue offices. Note: Revenue collections for FY10 are through October of 2009, except for Maine which only has released data on collections through September.

  25. Myth #3 Rhode Island’s governments aren’t slimming down as much as those of other states in the region

  26. ADDENDUM Tax Burdens and Tax Climate

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