Projo Biz Blog

By Steve Peoples
Journal State House Bureau

PROVIDENCE, R.I. -- The bottom is in sight, but Rhode Island's economy still has a long way to go before it begins to recover, according to the testimony provided at the State House this morning by Andres Carbacho-Burgos, an economist at Moody's Economy.com.

He predicted that the Ocean State will bottom out in mid-2010 after losing another 10,000 jobs. The unemployment rate -- already at 10.5 percent, its highest point in more than 30 years -- will peak at 12.3 percent, Carbacho-Burgos told a panel of state government's top economic analysists.

The panel, gathered in a largely empty room in the State House basement, is in the midst of its annual Revenue Estimating Conference. By early next week, they will have decided exactly how much money the state has to spend for the coming fiscal year.

The results -- which are tied directly to the health of the economy -- will determine how much lawmakers can dedicate to things like local education, public transportation, the state's hospitals and subsidized health insurance. And in the event of a massive deficit -- as has already been predicted -- state leaders will be under increasing pressure to raise taxes or further trim the state's workforce.

"Right now for 2009 we're forecasting that it's going to be a very bleak year for Rhode Island and the U.S.," Carbacho-Burgos said, describing the current conditions as "the worst downturn since the 1930s."

But he added some cause for optimism.

"In general, you could say that in just a couple of months, another quarter or two at most, the worst should be over for Rhode Island," he said.

But that simply means that the pace of decline is expected to slow. Housing prices, for example, won't begin to rise again "until 2011 at the latest," he said.

"But of course it's going to be many, many years before they return to their boom levels of 2005 and early 2006," Andres Carbacho-Burgos said.

House Fiscal Adviser Michael O'Keefe, among the most powerful budget officials in state government, described the economic forecast as "somewhat disappointing."

"There is a light at the end of the tunnel, but it's the oncoming train," he said.

 Tags  unemployment

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