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