Here’s a snapshot of the Rhode Island economy at midyear.

It’s based on government data, economists’ forecasts, reports by The Providence Journal’s commerce and consumer staff and my observations from covering the state for 20 years.

Overview

The Rhode Island economy has been contracting since 2007, affecting job creation, the housing market and private investment.

The state has shed jobs for 16 straight months and the unemployment rate has risen to record levels.

Median house and condo prices continue to slide from their peak in 2006.

Private investment, especially in downtown Providence, has slowed. Some projects have been shelved.

While there are early signs that the recession is starting to loosen its grip on Rhode Island, the state’s economy fell so far so fast and for so long that the recovery will be slow, gradual and uneven.

Some economic activity and job creation will be generated from public projects, such as highway relocations, and expansions by the state’s colleges and universities.

Federal stimulus funds have begun to flow into the state. However, most of the money so far has been spent to close deficits in state and municipal budgets and provide social services.

Longer term, the expansion of T.F. Green Airport, plans to build wind turbines off Rhode Island’s coast and the development of a life sciences industry could provide future economic growth.

Jobs

Rhode Island’s unemployment rate rose from 11.1 percent in April to 12.1 percent in May, the highest on record and the third highest in the United States. There were 68,500 residents out of work.

The state lost 20,700 jobs in the last year. Most sectors have seen declines, with the heaviest losses in manufacturing, construction and retail. The number of manufacturing jobs in Rhode Island has decreased every year since 1990, dropping to 43,600 in May from 95,100 in 1990.

Economists forecast the Rhode Island jobless rate could rise to 13 percent later this year. There will be little or no job growth in the first two quarters of 2010, while only 4,000 jobs will be created in the latter half of next year, according to a forecast by the New England Economic Partnership, a non-profit regional forecasting group.

“The unemployment rate will not be below 10 percent until 2011,” NEEP estimates.

Since the start of the national recession in December 2007, all six New England states have reported increases in their unemployment rates.

New England’s unemployment rate in May was 8.3 percent. The rates in each state were: Maine, 8.3 percent; Massachusetts, 8.2 percent; Connecticut, 8 percent; Vermont, 7.3 percent; and New Hampshire, 6.5 percent.

The U.S. jobless rate in June was 9.5 percent, up from 9.4 percent in May.

Housing

The median price of a single-family house fell to $190,000 in May, down 24.8 percent from May 2008. House prices peaked in the first quarter of 2006 at $280,000.

House sales in May were up 2 percent. About one-third of the sales, however, were “distressed sales,” meaning they were sold through foreclosures or short sales.

The median price of condominiums fell 31 percent from $231,500 in May 2008 to $159,000 in May 2009. The number of units sold dropped 35 percent, to 91 in May 2009.

The median price of multi-unit houses plunged 48 percent to $82,000 in May 2009. Sales increased over the 12-month period, from 119 to 172.

Some housing officials say the end of the slump is finally in sight in the latter half of 2009, but price appreciation in 2010 will be weak. One key factor will be if Rhode Island’s high rate of foreclosures and mortgage delinquencies start to shrink. A national economic recovery will also help the local economy and housing market.

State budget / revenues

Revenues from taxes, fees, lottery games and other sources fell by 14 percent in the first 11 months of the fiscal year that ended on Tuesday. Total revenues fell by $405 million, to $2.486 billion, for the 11 months through May 31, according to the Department of Revenue.

A $590-million budget deficit for the fiscal year that began Wednesday was closed with federal stimulus money, some pension reform, cuts in aid to cities and towns, some reductions in state spending, fee increases and a hike of 2 cents per gallon hike in the gasoline tax.

The Rhode Island Public Expenditure Council, a business-backed nonprofit group, and NEEP forecast sizeable budget deficits for the next few years, putting additional stress on state legislators to raise taxes when one-time fixes run out.

Business climate / taxes

Rhode Island has one of the highest personal income, corporate income and sales tax rates in the country. The tax burden has damaged the business climate and the ability of the state to attract new employers and local companies to expand.

Governor Carcieri’s proposal to eliminate the corporate income tax in phases and shrink the personal income tax brackets was not approved during the recent General Assembly session, now in recess.

The legislators did raise the state’s $675,000 estate-tax exemption to $850,000, effective Jan. 1, 2010, and index it to rise with inflation each year thereafter. The lawmakers also eliminated favorable treatment of profits from the sale of stock, mutual funds or other such assets. Capital gains would be treated as ordinary income. Carcieri approved the budget on Tuesday.

Rhode Island’s approach to economic development has for years been “fragmented, disjointed and without focus,” according to a report by a panel appointed by Carcieri and led by Al Verrecchia, chairman of Hasbro. The committee said a development strategy lacks leadership from the executive and development branches, and recommended a new board of directors and national search for a new director of the state Economic Development Corporation.

Development

Several major condominium developments in downtown Providence are moving toward completion. Because of the depressed housing market, some of the condos have been converted to apartment rentals. A $35-million condo and apartment complex called Capitol Cove has been leased as a dormitory to house 300 students from Johnson & Wales University.

Some condo and hotel projects, such as One Ten Westminster, have been delayed.

Other high-profile projects, such as renovations of an old power plant in the waterfront district and a factory complex in Olneyville, both being developed by Struever Bros. Eccles & Rouse, have been marred by cash-flow problems.

Colleges / universities

In January, the University of Rhode Island completed a $59-million biotechnology center in South Kingstown. URI also has been expanding its biotechnology research and teaching infrastructure in downtown Providence.

Brown University plans to spend $45 million renovating a building in the Jewelry District in Providence that will serve as the headquarters of its medical school. The university is also seeking tens of millions of dollars in federal stimulus funds to expand its medical education and research facilities in Providence.

Brown and Lifespan are interested in acquiring some of the 19 acres being freed up in downtown Providence by the relocation of Route 195.

Hospitals

The state’s two largest hospital networks, Lifespan and Care New England, have proposed a merger, now under review by regulators.

After state government, Lifespan is the second-largest employer in Rhode Island (11,772 jobs), according to a 2008 report by the state Economic Development Corporation. The other major hospital system, Care New England, employs 6,193.

Transportation

The state Department of Transportation has completed several stages in a $610-million project to relocate Route 195 and open up a huge section of Providence to development.

The DOT expects to move up the start date for about 50 road, highway and bridge projects when more federal stimulus funds are allocated.

Federal stimulus

About $154 million of federal stimulus funds was spent by state agencies through June 5. About $124 million, or 80 percent, has gone to Medicaid recipients. The breakdown of the other major categories is: state fiscal stability, $19.2 million; unemployment insurance, $10.3 million; highway infrastructure, $1 million.

Population

The state’s population (1.05 million in 2008) has decreased every year since 2005.

However, the population is expected to be stable in 2009 and grow slightly in 2010, in part because low real estate values have made it difficult for homeowners to sell their property, according to economists.

Most of the state’s population is concentrated in Providence County, which had 626,150 residents in 2008, according to the Census.

While the population in Providence County has slipped each year since 2006, Washington County’s population rose 1.8 percent to 126,264 in 2008.

The U.S. Census reports Rhode Island and Massachusetts are two of the most densely populated states in the country.

The median age in Rhode Island is 38.6 years old (2008), up from 36.8 years old in 2000.

Nationally, the median age is 36.8 years.

Personal income

Rhode Island ranked fifth among the New England states in personal income.

The total $43.4 billion in the first quarter dipped 0.6 percent from the fourth quarter of 2008. Only Connecticut among the New England states had a bigger drop, 1.2 percent.

The downturn in one industry — financial services — accounted for the bulk of the decline in earnings in Rhode Island. After finance, the hardest-hit sector was construction, for which aggregate income fell 5.6 percent quarter on quarter.

Rhode Island was one of 37 states in which personal income declined quarter to quarter during the first three months of the year. For the United States as a whole, income was down 0.5 percent in the first quarter after falling 0.4 percent in the fourth quarter of 2008.

Gross state product

Rhode Island’s gross state product in 2008 declined 2.1 percent, compared with an increase of 0.4 percent in the other New England states.

For 2009, gross state product in Rhode Island is forecast at $36.7 billion, down 3.1 percent from 2008, according to the New England Economic Partnership. The decline in the other New England states is estimated at 2.7 percent.

Education

Rhode Island has a relatively low high school graduation rate. Only 71 percent of members of the Class of 2005 earned high school diplomas, putting Rhode Island below Kentucky and West Virginia in the national rankings. The average level of schooling in Rhode Island ranks near heartland states such as Kansas and Nebraska.

Educational attainment is important to give people the skills to work in a knowledge-based economy, which attracts investment and companies that hire workers.

Rhode Island also has to reverse the brain drain of college graduates who create and manage new companies. The U.S. Census Bureau found that Rhode Island ranked sixth in the country in the loss of young, single, college-educated residents.

Opportunities

•T.F. Green Airport, a regional hub served by low-cost carrier Southwest Airlines, is completing a new $175-million people mover and station to connect the commuter rail line from Boston to the airport terminal. The Federal Aviation Administration has tentatively approved the extension of a runway to allow nonstop flights to the West Coast.

•Deepwater Wind plans to build 100 wind turbines off the coast of Rhode Island, creating the first offshore wind farm on the East Coast. The New Jersey company has signed an agreement with the state and has agreed to use Quonset Business Park as a staging area for the project, creating hundreds of jobs. The project could be a cornerstone for creating an alternative-energy economy in Rhode Island.

•Drugmaker Amgen runs one of the world’s largest biomanufacturing plants in West Greenwich and a second biopharmaceutical company, Alexion, is nearing completion of a $116-million drug manufacturing plant in Smithfield. State officials say that the life sciences sector is among the industries with the best potential for growth, based on the high quality of the state’s universities and research hospitals and rapidly growing health-care spending in the United States.

Economic events

Twin River, a gambling facility, filed for Chapter 11 protection from creditors in U.S. Bankruptcy Court. The owners and lenders have tentatively agreed to a change in control, but the matter is far from resolved. Twin River contributes about $245 million annually to the state budget. Any change in control or in its agreement with the state would have ramifications for the state budget.

Outlook

The U.S. unemployment rate is forecast to rise to 10 percent by year’s end, but gross domestic product, a key indicator of economic activity, is expected to turn positive by year’s end. That would signal that a national recovery is under way, which eventually will put people to work and pull state economies with it.

So is the bottom of the Rhode Island’s longest, deepest recession in decades in sight?

Yes. In the distance. The economy is starting to show signs of stabilizing. But the days earlier this decade of single-digit unemployment, spiking property values and booming development seemingly on every corner will not return soon.

Rhode Island’s recovery will be a grind.

With reports from Benjamin N. Gedan. John Kostrzewa is The Journal’s business editor and can be e-mailed at jkostrze@projo.com