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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.
Areas of Focus
• Unemployment, Employment and Overall Growth
• Housing • Prices and Consumer
Confidence• New England Fiscal Situation
• New England has been through rough times before……..
Boston Sports IndexIndex 1920=1 (Babe Ruth traded to the Yankees, the curse begins)
Celtics Reign of Terror (57-
69)Multiple Bruins and Celtics Championships
Buckner!
Patriots Super Bowl Wins
Yankees win Game 7 ALCS with walk-off homerun
Red Sox come back to beat Yankees in ALCS and win WS
Red Sox 2007 WS Champs
Pats 16-0 and no Super Bowl
Notes:Red Sox given favorable weights.
Celtic’s Champs
Brady Out
Brady’s Back!
Red Sox Playoff Loses
Areas of Focus
• Unemployment, Employment, and Overall Growth• Housing • Prices and Consumer Confidence• New England Fiscal Situation
Unemployment rates have increased more rapidly in Rhode Island than the region or nation
United States
New England
Rhode Island
Source: U.S. Bureau of Labor Statistics.Note: Data are seasonally adjusted.
Percent Through Oct, 2009
October 2008 October 2009
United States 6.6 10.2
New England 6.0 8.8
Connecticut 6.1 8.8
Maine 5.7 8.2
Massachusetts 5.8 8.9
New Hampshire 4.0 6.8
Rhode Island 8.8 12.9
Vermont 4.9 6.5
Source: U.S. Bureau of Labor Statistics
Unemployment Rates
Year-over-year employment growth has fallen more sharply in Rhode Island than the region or nation
Percent Change from Year Earlier
United States
New England Rhode Island
Source: U.S. Bureau of Labor Statistics.Note: Data are seasonally adjusted.
Through Oct, 2009
NH
ME
RI
US
VTCT
Through October 2009
MA
Total Employment
Index: Each state’s pre-recession peak is equal to 1.
Source: Bureau of Labor Statistics
MYTH #1Rhode Island’s employees have not gained in productivity to the extent
of their counterparts in Massachusetts and Rhode Island
Sources: Federal Reserve Bank of Philadelphia and the Bureau of Labor Statistics
Index: Each state’s pre-recession peak is equal to 1.
State Economic Activity Indexes
MA
RI
NH
VT
ME
CT
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).
US
Through Oct, 2009
Employment growth by industry: the pain is widespread
Source: U.S. Bureau of Labor Statistics.Note: Data are seasonally adjusted.
Percent Change, October 2008 to October 2009
MYTH #2Rhode Island’s employment lags
because,unlike in Massachusetts and other
states,it hasn’t kept up in education and
health services
Areas of Focus
• Unemploment, Employment, and Overall Growth
• Housing• Prices and Consumer
Confidence• New England Fiscal Situation
Foreclosure Rates
Source: Mortgage Bankers Association, Haver Analytics.
Percent of loans with foreclosure initiation in quarter
New England
United States
Rhode Island
Through Q3, 2009
Foreclosures InitiatedPercent of Total Mortgages
Vermont
Source: Mortgage Bankers Association
Percent Through Q3, 2009
Housing prices rose more steeply in Rhode Island and New England than the U.S. and began to fall sooner
United States
New England
Rhode Island
FHFA Home Price IndexNot Seasonally Adjusted, 1980 Q1 = 100
Percent Change from Year Earlier
Source: Federal Housing Finance Agency.
Through Q3, 2009
Housing construction: New England did not experience the same build-up as U.S. overall; Rhode Island fell earlier
Index, June 1995 = 1
United States
New England
Rhode Island
Single-Unit Housing Permits Authorized Through Sep, 2009
The slowing of the housing market is also evidenced by the drop in existing home sales
Index, 1990 Q1 = 1
United States
New England
Rhode Island
Source: National Association of Realtors.
CT+ME+MA+RI
Through Q3, 2009
Areas of Focus
• Unemployment, Employment, and Overall Growth
• Housing• Prices and Consumer
Confidence• New England Fiscal Situation
After a few months of decline, prices are beginning to move upward again.
United States
Boston Area
Source: U.S. Bureau of Labor Statistics.
Percent Change from Year Earlier Consumer Price Index – All Urban Consumers
Through Oct, 2009
Consumer confidence has fallen dramatically over the last year and a half and remains low, but appears to
be on the rebound
United States
New England
Source: Conference Board, Haver Analytics.
Index, 1985 = 1Through Oct, 2009
Areas of Focus
• Unemployment, Employment and Overall Growth
• Housing• Prices and Consumer
Confidence• New England Fiscal Situation
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.
Myth #3Rhode Island’s governments aren’t
slimming down as much as those of other states in the region
ADDENDUM
Tax Burdens and Tax Climate