Plenary Session PresentationPlenary Session PresentationSouthern New England Economic Outlook--Summit 2002Southern New England Economic Outlook--Summit 2002

Foxwoods Resort CasinoFoxwoods Resort Casino

Mashantucket, CTMashantucket, CTMay 10, 2002May 10, 2002

Gary Ciminero, CFAGary Ciminero, CFAActing DirectorActing Director

Rhode Island House Policy OfficeRhode Island House Policy Office

New England Economic Prospects:New England Economic Prospects:Minimal Recession Ended—Moderate Recovery in StoreMinimal Recession Ended—Moderate Recovery in Store

What will the economy look like nationally and regionally?What will the economy look like nationally and regionally?

Recession Ending in New EnglandRecession Ending in New England

RI Historical Perspectives:RI Historical Perspectives:Jobs Lost During “Great Recession” Jobs Lost During “Great Recession” Regained During 10-Year RecoveryRegained During 10-Year Recovery

RI Jobs in Expansion: After Losing 54K Jobs in "Great Recession" … 66.7K Payroll Jobs Added in Subsequent 123 Months of Recovery thru 03/02: Trade Jobs Fully Recovered

… but Manufacturing Still Falling Dramatically

-54.0

-1.4

-8.2

-5.1

-19.5

-1.9

66.7

-23.1

8.0

5.8

47.9

21.0

3.0

4.1

0.9

-18.9

-70 -60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70

Total Non-Farm Payroll Jobs (Thous.)

Manufacturing

Finance, Ins., & RE

Construction

Services

Total Trade

Trans./Pub. Util.

Governments

Peak-Trough (6/89-12/91) Trough-Now (12/91-3/02)

RI Current Conditions:RI Current Conditions:Monthly Rhode Island Job Trends Monthly Rhode Island Job Trends

January, 1985--March, 2002January, 1985--March, 2002

Mild Recession Impact on RI Jobs--Feb & Mar '02 Jobs Hit New Record LevelAfter Stalling Since July '01--and Unemployment Rate Falls to 4.2%

400

410

420

430

440

450

460

470

480

490

Jan-

85

Jul-

85

Jan-

86

Jul-

86

Jan-

87

Jul-

87

Jan-

88

Jul-

88

Jan-

89

Jul-

89

Jan-

90

Jul-

90

Jan-

91

Jul-

91

Jan-

92

Jul-

92

Jan-

93

Jul-

93

Jan-

94

Jul-

94

Jan-

95

Jul-

95

Jan-

96

Jul-

96

Jan-

97

Jul-

97

Jan-

98

Jul-

98

Jan-

99

Jul-

99

Jan-

00

Jul-

00

Jan-

01

Jul-

01

Jan-

02

BA

RS

: N

on

farm

Em

plo

ymen

t (M

on

thly

, SA

)

2

3

4

5

6

7

8

9

10

11

LIN

E:

Un

emp

loym

ent

Rat

e, %

RI Current Labor Market Conditions: Sector RI Current Labor Market Conditions: Sector Jobs Growth: 1Q-’02 vs. 1Q-’01Jobs Growth: 1Q-’02 vs. 1Q-’01

Through March 2002, Jobs up just 1,000 or 0.1% vs. 2001 PeriodFIRE, Services, and Have Biggest Percentage Gains

Construction and TPU Tick Down but Manufacturing begins to Plunging at Near Record Rates

0.1

-6.9

3.5

-1.1

2.3

0.8

-1.4

0.1

-8 -7 -6 -5 -4 -3 -2 -1 0 1 2 3 4 5 6 7

Total Nonfarm Jobs (%-ch.)

Manufacturing

Finance, Ins., & RE

Construction

Services

Total Trade

Trans./Pub. Util.

Governments

RI Current Conditions: Housing MarketRI Current Conditions: Housing Market

RI Housing Market through Late-2001Home Resales Stay Near 1998 Highs (line)

asResale Prices Race Even Higher to New All-Time Record (bars)

100

110

120

130

140

150

160

170

180

190

19

88

Q1

19

88

Q3

19

89

Q1

19

89

Q3

19

90

Q1

19

90

Q3

19

91

Q1

19

91

Q3

19

92

Q1

19

92

Q3

19

93

Q1

19

93

Q3

19

94

Q1

19

94

Q3

19

95

Q1

19

95

Q3

19

96

Q1

19

96

Q3

19

97

Q1

19

97

Q3

19

98

Q1

19

98

Q3

19

99

Q1

19

99

Q3

20

00

Q1

20

00

Q3

20

01

Q1

20

01

Q3

BA

R: S

ing

le-F

am

. M

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ian

Re

sale

Pri

ces,

($

10

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)

0

5

10

15

20

LIN

E: S

ing

le-F

am

. Ho

me

Re

sale

s (1

00

0's

,SA

AR

)

RI Current Conditions: Auto MarketRI Current Conditions: Auto Market

Strong RI Auto Market Spikes Up on 0% Financing in Oct '01-/Jan '02. Then Loses Momentum in Feb '02

0

1000

2000

3000

4000

5000

6000

7000

Jan

-90

Jan

-91

Jan

-92

Jan

-93

Jan

-94

Jan

-95

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

To

tal

Ne

w V

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icle

Re

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SA

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MA Historical Perspectives:MA Historical Perspectives:Jobs Lost During “Great Recession” Jobs Lost During “Great Recession” Regained During 10-Year RecoveryRegained During 10-Year Recovery

Massachusetts Jobs Well into Expansion Mode:564K Payroll Jobs Added in Subsequent 10-Year Recovery thru 12/01

Services Take Over; Trade Just Recovering; Mfg. Still Falling, FIRE Up Just 11K

521

-64

34

67

321

97

19

47

-364

-103

-21

-65

-20

-112

-13

-31

-500 -400 -300 -200 -100 0 100 200 300 400 500 600

Total Jobs at MA Employers

Manufacturing

Finance, Ins., & RE

Contract Construction

Services

Total Trade

Trans./Pub. Util.

Governments

Trough-now (12/91-12/01 Peak-Trough (10/88-12/91

MA Current Conditions:MA Current Conditions:Monthly Rhode Island Job Trends Monthly Rhode Island Job Trends

January, 1985--March, 2002January, 1985--March, 2002

MA Jobs Down 1.9% and Counting--Recession Began in 1/01 and Still Underway?Payroll Jobs Off 63,400 thru 3/02--Unemployment Rate of 4.4% at 6-Year High

2600

2700

2800

2900

3000

3100

3200

3300

3400

Jan-

85Ju

l-85

Jan-

86Ju

l-86

Jan-

87Ju

l-87

Jan-

88Ju

l-88

Jan-

89Ju

l-89

Jan-

90Ju

l-90

Jan-

91Ju

l-91

Jan-

92Ju

l-92

Jan-

93Ju

l-93

Jan-

94Ju

l-94

Jan-

95Ju

l-95

Jan-

96Ju

l-96

Jan-

97Ju

l-97

Jan-

98Ju

l-98

Jan-

99Ju

l-99

Jan-

00Ju

l-00

Jan-

01Ju

l-01

Jan-

02

BA

RS

: N

on

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Em

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2

3

4

5

6

7

8

9

10

Lin

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MA Current Labor Market Conditions: MA Current Labor Market Conditions: Sector Jobs in Decline: 01/01-03/02Sector Jobs in Decline: 01/01-03/02

From Job Peak of 1/01 thru 3/02: Employment fell 63,400Manufacturing had Biggest Decline, Followed by Services.

All Other Sectors Flat/Down Except for Construction

-63.4

-31.7

0.4

6.2

-24.7

-5.5

-7.9

-0.3

-70 -60 -50 -40 -30 -20 -10 0 10

Total Jobs at MA Employers

Manufacturing

Finance, Ins., & RE

Contract Construction

Services

Total Trade

Trans./Pub. Util.

Governments

MA Current Conditions: Housing MarketMA Current Conditions: Housing Market

Very Strong MA Housing Market through 4Q/00Home Resales Stay Near Record High (line)

asResale Prices Stay Near Recond Levels (bars)

0

50

100

150

200

250

300

350

400

450

500

1987

Q3

1988

Q1

1988

Q3

1989

Q1

1989

Q3

1990

Q1

1990

Q3

1991

Q1

1991

Q3

1992

Q1

1992

Q3

1993

Q1

1993

Q3

1994

Q1

1994

Q3

1995

Q1

1995

Q3

1996

Q1

1996

Q3

1997

Q1

1997

Q3

1998

Q1

1998

Q3

1999

Q1

1999

Q3

2000

Q1

2000

Q3

2001

Q1

2001

Q3

BA

R:

Sin

gle

-Fam

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rice

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($10

00)

0

10

20

30

40

50

60

70

80

90

100

LIN

E:

Sin

gle

-Fam

. Ho

me

Res

ales

(1

000'

s,S

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Current Conditions: Housing Price Current Conditions: Housing Price Comparisons—MA, RI, CTComparisons—MA, RI, CT

Median Existing Home Prices in New England 4Q/2001RI Soars to New Highs but Still Competitive vs MA & CT

MA Prices, 2nd Highest in US, Peak out at $343K after Ticking Down in 3Q CT Prices Hit New All-Time Highs

50

100

150

200

250

300

350

1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1

Sin

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, $10

00)

Massachusetts Connecticut Rhode Island

Current Conditions: Sector Income Current Conditions: Sector Income Comparisons—MA & RIComparisons—MA & RI

Average Annual Income Through 4Q-2001 ($thous.)MA Jobs Pay More than RI except for Governmental

RI: Government & Finance-Related Jobs Lead in Average Pay MA: Finance-Related and Manfacturing Lead in Average Pay

$49.2 $47.1$42.0

$39.6 $39.5$35.2

$31.6

$24.1

$82.9

$41.8

$53.0$47.8

$55.0

$46.2 $45.4

$30.8

0

10

20

30

40

50

60

70

80

90

FIRE Governments Cont Const Trans publ Ut Manufacturing Total Nonfarm Services Total Trade

Rhode Island Massachusetts

Current Conditions: Personal Income Current Conditions: Personal Income Comparisons—New England Comparisons—New England

Latest Release Personal Income--4Q01MA Ranks Last at +0.5% … RI +2.7%, Ranks 2nd in New England

($ Change vs. 4Q'00)

1.7

0.9

0.7

3.3

0.5

0.8

2.7

2.6

0 1 2 3 4

United States

New England Region

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

Current Conditions: Residence Current Conditions: Residence Adjustment—New England Adjustment—New England

Three New England States Rank Among Highest as "Bedroom States"Based on Percent of Net Personal Income Earned Out-of-State

NH Residents Earn 9% Out-of-State, Second only to MD NationallyCT & RI, at 4.8% & 3.9% Rank 4th & 5th

4.8

0.9

-1.9

9.0

3.9

0.7

-4 -2 0 2 4 6 8 10

CT

ME

MA

NH

RI

VT

Residence Adjustment as % of Personal Income: 4Q01

Current Conditions: Transfer PaymentsCurrent Conditions: Transfer Payments—New England —New England

Residents of ME and RI Rank 7th & 11th in US on Proportion of Income from Retirement, Welfare, & Other Transfers

13.3

12.4

11.2

12.0

10.6

16.6

14.8

17.2

0 2 4 6 8 10 12 14 16 18 20

United States

New England Region

Connecticut

Maine

Massachusetts

New Hampshire

Rhode Island

Vermont

Total Transfer Payments (excl. UI) as % of Personal Income: 4Q01

RI Consensus Revenue Estimating RI Consensus Revenue Estimating Conference—Adopted Economic Conference—Adopted Economic

Outlook—RI and MAOutlook—RI and MAU.S. Rhode Island Massachusetts

RecessionStart March, 2001 August, 2001 February, 2001Finish February, 2002November, 2001 April, 2002Severity % Change -1.1% -0.20% -1.70%Severity Annualized % change -1.1 -0.8% -1.40%Probability 90% 90% 90%

Recovery PhaseStart March, 2002 December, 2001 May, 2002Finish October, 2003 October, 2003 September, 2003Severity % Change +3.0% +2.9% +2.1%Severity Annualized % change 1.75% +1.4% +1.7%Probability 70% 70% 70%

Rhode Island Consensus Revenue Estimating Conference6-May-02

RICREC—Adopted Economic Outlook— RI RICREC—Adopted Economic Outlook— RI and MAand MA

Rhode Island Consensus Revenue Estimating Conference:Adopted Forecast

0.61.0

1.5

-0.8

1.3 1.2

-8

-6

-4

-2

0

2

4

1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Non

farm

Job

s G

row

th

RI Actual Annual Growth MA Actual Annual Growth Adopted RI Forecast Adopted MA Forecast

RICREC—Adopted Economic Outlook— RI RICREC—Adopted Economic Outlook— RI Sector Forecast: 2002-03Sector Forecast: 2002-03

Job Forecast by Sector: Forecast for 2002 and 2003

-4.9

4.4

0.1

1.8

1.3

0.1

0.3

1.5

1.1

2.9

2.6

2.0

2.1

0.1

-6 -4 -2 0 2 4 6

Manufacturing

Finance, Ins., & RE

Construction

Services

Total Trade

Trans./Pub. Util.

Governments

2002 Forecast 2003 Forecast

Rhode Island Withholdings Taxes:Rhode Island Withholdings Taxes:Decline for 1st Time Since the Last Decline for 1st Time Since the Last

RecessionRecession

National Reces s ion Hits RI Withholdings Bas e:2001 Barely Up … 1Q'02 in 1s t Decline Since Las t Reces s ion

-8

-6

-4

-2

0

2

4

6

8

10

12

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002Q

1

Perc

en

tag

e A

nn

ual

Gro

wth

Rate

Yearl

y t

hru

'01.

1Q

'02 v

s.1

Q '01

Rhode Island Taxpayer MigrationRhode Island Taxpayer Migration

RI Net Tax Return In-Migration: Number and AGI

-8,000

-6,000

-4,000

-2,000

0

2,000

4,000

1993 1994 1995 1996 1997 1998 1999 2000 2001

Net

Nu

mb

er

of

In-m

igra

nt

Tax R

etu

rns

-200

-150

-100

-50

0

50

100

$ M

illio

ns

Net Number of In-Migrant Returns Net In-Migrant AGI

Rhode Island Demographics: 1990-00Rhode Island Demographics: 1990-00

Massachusetts Demographics:Massachusetts Demographics:1990-001990-00

Table DP-1 Profile of General Demographic Characteristics for Massachusetts: Change 1990-2000

NUMBER/Percentage CHANGE NUMBER/Percentage CHANGESubject/Year 1990 2000 Number Percent 1990 2000 Number Percent

Chg Chg Total population 6,016,425 6,349,097 332,672 5.5 HISPANIC OR LATINO AND RACE SEX AND AGE Total population 100.0% 100.0% 332,672 5.5Male 48.0% 48.2% 170,071 5.9 Hispanic or Latino (of any race) 4.8 6.8 141,180 49.1Female 52.0 51.8 162,601 5.2 Mexican 0.2 0.4 9,585 75.5

Puerto MAcan 2.5 3.1 48,014 31.8Under 5 years 6.9 6.3 -15,205 -3.7 Cuban 0.1 0.1 761 9.45 to 9 years 6.3 6.8 52,826 14.0 Other Hispanic or Latino 1.9 3.1 82,820 71.710 to 14 years 5.8 6.8 83,154 23.9 Not Hispanic or Latino 95.2 93.2 191,492 3.315 to 19 years 6.8 6.5 5,803 1.4 White alone 87.8 81.9 -81,933 -1.620 to 24 years 8.5 6.4 -109,360 -21.325 to 34 years 18.3 14.6 -174,573 -15.9 RELATIONSHIP35 to 44 years 15.3 16.7 144,539 15.7 Total population……………………………… 100.0% 100.0% 332,672 5.545 to 54 years 10.0 13.8 273,258 45.5 In households 96.4 96.5 325,763 5.655 to 59 years 4.2 4.9 56,544 22.3 Householder 37.3 38.5 196,470 8.760 to 64 years 4.3 3.7 -25,192 -9.6 Spouse 19.5 18.9 27,642 2.465 to 74 years 7.6 6.7 -32,051 -7.0 Child 30.6 29.0 4,156 0.275 to 84 years 4.4 5.0 48,446 18.1 Own child under 18 years 20.9 21.8 123,760 9.885 years and over 1.5 1.8 24,483 26.6 Other relatives 4.0 4.5 39,997 16.4

Under 18 years 1.1 1.4 20,270 30.1Median age (years) 34 37 3 9.0 Nonrelatives 5.0 5.6 57,498 19.1

UnmarMAed partner 1.3 2.1 52,091 66.118 years and over 77.5% 76.4% 185,683 4.0 In group quarters 3.6 3.5 6,909 3.2 Male 36.5 36.1 94,417 4.3 Institutionalized population 1.4 1.4 4,108 4.9 Female 41.0 40.3 91,266 3.7 Noninstitutionalized population 2.2 2.1 2,801 2.221 years and over 72.5 72.3 226,713 5.262 years and over 16.2 15.7 20,001 2.0 HOUSEHOLDS BY TYPE65 years and over 13.6 13.5 40,878 5.0 Total households 2,247,110 2,443,580 196,470 8.7 Male 5.2 5.4 29,265 9.4 Family households (families) 67.4% 64.5% 61,950 4.1 Female 8.4 8.2 11,613 2.3 With own children under 18 years 30.7 30.6 59,761 8.7

MarMAed-couple family 52.1 49.0 27,642 2.4RACE With own children under 18 years 23.3 22.4 24,153 4.6One race 100.0% 97.7% 186,667 3.1 Female householder, no husband present 12.1 11.9 19,021 7.0 White 89.8 84.5 -38,088 -0.7 With own children under 18 years 6.3 6.7 21,639 15.2 Black or African American 5.0 5.4 43,324 14.4 Nonfamily households 32.6 35.5 134,520 18.4 American Indian and Alaska Native 0.2 0.2 2,774 22.7 Householder living alone 25.8 28.0 103,571 17.8 Asian 2.4 3.8 95,987 67.5 Householder 65 years and over 10.8 10.5 12,803 5.3 Asian Indian 0.3 0.7 24,082 122.1 Chinese 0.9 1.3 30,600 56.9 Households with individuals under 18 years 32.6 32.9 71,500 9.7 Filipino 0.1 0.1 2,061 33.2 Households with individuals 65 years and over 25.6 24.7 28,673 5.0 Japanese 0.1 0.2 1,755 20.0 Korean 0.2 0.3 5,625 47.9 Average household size 2.58 2.51 -0.07 -2.7 Vietnamese 0.3 0.5 18,513 119.8 Average family size 3.15 3.11 -0.04 -1.3 Other Asian 1… 0.4 0.6 13,351 50.5 Native Hawaiian and Other Pacific Islander - - 1,234 98.3 HOUSING OCCUPANCY Native Hawaiian - - 57 11.3 Total housing units 2,472,711 2,621,989 149,278 6.0 Guamanian or Chamorro - - 165 45.3 Occupied housing units 90.9% 93.2% 196,470 8.7 Samoan - - 272 133.3 Vacant housing units 9.1 6.8 -47,192 -20.9 Other Pacific Islander 2… - - 740 406.6 For seasonal, recreational, or occasional use 3.7 3.6 3,404 3.8 Some other race 2.6 3.7 81,436 52.4Two or more races (NA) 2.3 (NA) (NA) Homeowner vacancy rate (percent) 1.7 0.7 -1.0 (X)

Rental vacancy rate (percent) 6.9 3.5 -3.4 (X)Race alone or in combination with one or more other races: 3 HOUSING TENUREWhite (NA) 86.2% (NA) (NA) Occupied housing units 2,247,110 2,621,989 196,470 100.0Black or African American (NA) 6.3 (NA) (NA) Owner-occupied housing units 59.3% 61.7% 176,559 89.9American Indian and Alaska Native (NA) 0.6 (NA) (NA) Renter-occupied housing units 40.7 38.3 19,911 10.1Asian (NA) 4.2 (NA) (NA)Native Hawaiian and Other Pacific Islander (NA) 0.1 (NA) (NA) Average household size of owner-occupied units 2.82 0.70 -0.10 (X)Some other race (NA) 5.1 (NA) (NA) Average household size of renter-occupied units 2.24 3.50 -0.07 (X)