RI facing ‘a lost decade’ after jobless rate hits 11% in new dataFebruary 29th, 2012 at 6:00 am by Ted Nesi under Nesi's Notes, On the Main Site
PROVIDENCE, R.I. (WPRI) – It turns out Rhode Island’s job market wasn’t as ugly as it looked in 2011.
It was worse.
Rhode Island’s unemployment rate hasn’t fallen below 11% in more than two and a half years and was higher than originally reported throughout 2011, according to revised data released Wednesday by the Department of Labor and Training. Fewer residents were working or looking for work last year than first reported, as well.
“It shows that the recovery was probably a little bit slower than we thought,” said Zachary Sears, an economist with Moody’s Economy.com who tracks Rhode Island. He cited a number of factors that held back the economy in 2011, notably the euro crisis, the debt-ceiling debate and rising oil prices. “All those weights make for a very slow recovery.”
Rhode Island will not regain all the jobs the state lost in the downturn until 2015, the same year the unemployment rate will fall back to 6%, according to Economy.com’s forecast. The state began losing jobs in 2007, about a year before the nation as a whole.
“It comes back later and Rhode Island also went into recession a little earlier, so it’s a longer period of very difficult times,” Sears said. “That’s from 2007 and you get back there in 2015. That’s a long time. That’s almost a lost decade, so to speak.”
The so-called “benchmark revisions” adjust the employment data reported month by month during the prior year, which come from sample surveys, by comparing them with tax records and other data.
Among the most worrying revisions was the new estimate of the size of the labor force, which counts how many Rhode Islanders are working or looking for work. The state’s labor force dropped to 562,007 workers in December, lower than during the worst of the recession in the spring of 2009, partly because the state has continued to lose population.
“That’s not good,” Sears said. “It goes against our forecast. We expected a slight increase in 2011 that would come along with the improving economy, and that didn’t happen. That is worrisome.”
“We still have population turning around [in Economy.com's forecast] – it’s just been delayed,” he said. “But to the extent that those weak demographics continue and don’t improve as the weak economy improves, it’s more symptomatic of a long-term problem and not just cyclical.”
The new data shows Rhode Island’s unemployment rate rose from 4.8% in January 2007 to peak at 11.9% in January 2010, then slowly started to fall over the last two years. In 2011, the state’s private sector added a net 2,200 jobs while employment in the public sector fell by 1,100.
Sears did see one possible silver lining in the latest numbers. The revised data only extends through September, with survey figures being used for the last three months of the year. Income tax receipts and new claims for jobless benefits led him to thinks the current estimates overstate how weak Rhode Island’s economy was at the end of last year.
“If you look at the national economy, it picked up speed in the fourth quarter after weakness in the third,” Sears said. “There’s no indication that Rhode Island did anything different.”
“Rhode Island is a small economy,” he added. “Most of what determines the fate of Rhode Island happens outside of its borders.”