The Bureau of Economic Analysis released its new economic growth numbers today and there are a few things I want to ruminate on.
“Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.2 percent in the fourth quarter of 2014, according to the ‘second’ estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.”
This is a good one. The good times rolled in the third quarter. At 5 percent we could keep up with China. We fell back to earth in the 4th quarter, 2.2 percent, which just so happens to match the growth rate in each of the last 3 years. Interestingly the biggest swings in spending were by the federal government, especially in the defense sector.
Real GDP increased 2.4 percent in 2014 (that is, from the 2013 annual level to the 2014 annual level), compared with an increase of 2.2 percent in 2013.”
The chart that followed also included the 2012 number, 2.3%. GDP growth in the last few years has been remarkably consistent the last few years, 2.2 percent to 2.4 percent. Actually the economy has been averaging something in the low two’s for quite a while. The national average includes things like the fracking boom towns of North Dakota (growth rate in 2013 15 percent) and Texas, the financial and entertainment centers of the universe, and the rural counties of Mississippi.
An honest assessment of Rhode Island puts us slightly below the national average in assets and growth potential. We are not a natural resource boom town, we are not a mega city and financial center. We are an old industrial place that lost out when the nation stopped being water-powered and we were no longer cheap labor. Despite the screams of the John Birchers (I was handed a John Birch Society pamphlet at a public hearing recently), the heroic efforts of the business climate obsessives, and the promises of the legislature the fundamentals of the Rhode Island economy remain those of a post industrial medium sized city that is vulnerable to the vagaries of climate change and the slowing global economy.
But Rhode Island public policy is predicated on rapid growth, 3.2 percent on average. A better understanding of ourselves, especially of how economy works in a 2 percent growth world, would go a long way towards aligning policy with bringing prosperity to our communities rather than just filling the coffers of the few.
The cause du jour for this sermon is the effort by some of the wealthiest men in New England to move the Pawsox to a park in Providence. Rhode Island has a sordid history on this sort of thing, Big money crushing communities and demanding subsidies or threatening to go elsewhere with their money. I do not like the deal, but who cares. The one thing you should care about is making sure that the whole deal gets a very full public airing and that this is followed by a series of public hearings in all the affected communities. Today I have been making calls seeking a hearing and CRMC says it will hold one if they get a formal application, but the effected cities should also hold hearings for the public to air their concerns.
The more I read about the land in question, the less I like the deal. Either stealing public parks and waterfront or admitting that the knowledge district is more fantasy than reality. Neither makes us look good. The first thing the lords of Triple A should do is state that since they believe they are high rent economic development they are willing to pay fair market value for any land they build upon including all of the land they use for parking. Let the public airing truly begin before this develops any momentum and any more palms get greased.