PROVIDENCE — Rhode Island is poised to take advantage of a boom in clean energy and life sciences, an investment strategist told state officials on Thursday as they collect ideas on how to spend an influx of federal funding.
Rhode Island is expected to receive $1.78 billion from the American Rescue Plan, which includes more than $1.1 billion for state government.
So Governor Daniel J. McKee, a Democrat who took office in March, has organized a series of “Rhode Island 2030″ conversations to develop a strategy for using those funds. Thursday’s event, which took place live on Facebook, included a panel whose members emphasized the need to invest in areas such as housing and health care.
Joseph Zidle, chief investment strategist at the Blackstone Group, set the stage, saying he expects the US economy to grow by more than 7 percent in 2021. The last time the country saw that level of growth was 1984, he said, noting that was when the original “Karate Kid” movie came out.
“Fast forward almost 40 years, and you will still have Karate Kid and the Miyagi-Do facing Cobra Kai, and again we are going to see GDP growth above 7 percent,” Zidle said. “We are on the cusp of a recovery that is going to be strong, but it’s also going to be self-sustaining.”
Usually, economic recovery happens in stages, with household income and spending beginning to bounce back, followed by increases in corporate revenues and earnings, followed by higher tax receipts and budgets for state and local governments, he said. But this recovery will be “uniquely synchronized” with a rebound expected in all three categories at once, he said.
“As a result, this economy is going to be like a thoroughbred out of the gates,” Zidle said. “We are going to see economic growth that we haven’t seen in decades, if not generations.”
As states begin lifting COVID-19 restrictions, household spending will not only go toward the purchase of goods but also into services that put dollars in the pockets of hotels, restaurants, and other local businesses, Zidle said. “The consumer is going to be unleashed,” he said.
Rhode Island is well positioned to bolster its economy for the long-term in the clean energy industry, Zidle said.
The state already has the nation’s only operational offshore wind farm off Block Island, he said, and now President Biden’s administration is making clean energy a priority, proposing a 27 percent increase in clean energy spending in the 2022 federal budget as part of a drive to “decarbonize” the electricity sector by 2035, he said.
With the University of Rhode Island’s “world-class” oceanography program and business incubators, the state has a “pipeline of talent” to capitalize on those initiatives, he said. But he warned that New York and New Jersey also plan to compete for those projects and funding.
Zidle said Rhode Island also could capitalize on the growth in the life sciences industry based in Massachusetts.
“There is no other city in the world that has the same strength of biotech as Boston,” he said. “And there is an opportunity for Rhode Island to participate in that ecosystem in a meaningful way.”
Companies are beginning to move out of Boston “because it’s kind of busting at the seams,” Zidle said. And while some firms are moving west and north, Rhode Island could attract some of those companies by building on its Innovation & Design District and tapping the expertise of Brown University and companies such as CVS and Amgen, he said.
During a panel discussion, Bruce Van Saun, chairman and CEO of Citizens Financial, agreed that clean energy and life sciences hold promise for Rhode Island. “You need to build around your strengths,” he said.
Van Saun called for investment in education and workforce development, saying, “We need to keep growing jobs in the digital space – data and analytics, software engineering, and cyber experts,” he said.
Van Saun also called for keeping taxes low. “While we have the wherewithal now to make smart investments – that’s great – but we also need to keep a pro-business climate in this state, which will be really helpful over the medium and longer term,” he said.
Larry Warner, chief impact and equity officer of the United Way of Rhode Island, called for investing in youth not only through education but also through after-school programs and summer learning.
Warner emphasized the need to invest in more affordable housing in Rhode Island. “Housing is not only a human right and essential for health,” he said, it’s also needed to house the workforce and to help grow the economy.
Martha Wofford, the new president and CEO of Blue Cross & Blue Shield of Rhode Island, said, “When we think about health care, there is a lot of opportunity to look at our health care workforce, and we need some new support for our under-served communities.”
The pandemic made it clear “that we are not serving everybody in an equitable way, and there is a big opportunity in that short-term to better serve all of our communities,” she said.
Wofford agreed with the need to invest in areas such as housing that will keep people healthy. And she emphasized the need for affordability in both housing and health care. “If we let our health care costs go up, we are going to crowd out the kind of wages that we want to pay people and the kind of job growth we want,” she said.
McKee said he is planning future conversations as part of “Rhode Island 2030″ and has set up a website.