Rhode Island’s economy delivered a mixed bag of results in the fourth quarter of 2025, with gains in employment and a declining unemployment rate offset by losses in in-state jobs and a dip in sales tax receipts, according to a report released Tuesday by Bryant University and the Rhode Island Public Expenditure Council.
The Rhode Island Key Performance Indicators Quarterly Briefing found that the number of employed Rhode Islanders rose for a second consecutive quarter, adding 3,800 jobs — a 0.7 percent increase — to reach 565,400 after four straight quarters of decline. Year over year, employment increased by 800 jobs, or 0.1 percent.
The state’s unemployment rate also fell for the second straight quarter, dropping from 4.6 percent to 4.3 percent after nine quarters of either increase or no change. It was the first time in seven quarters that Rhode Island’s rate dipped below the national average of 4.5 percent, though it remained slightly above New England’s rate of 4.2 percent. Unemployed Rhode Islanders totaled 25,400 in Q4, a drop of 1,800 from the previous quarter and 1,400 year over year.
But other indicators pointed to softening. Rhode Island-based jobs, or non-farm employment, totaled 513,500 in Q4, down 600 jobs from the prior quarter and 1,600 fewer than the record of 515,100 set in the first quarter of 2025. Net sales tax receipts — a key indicator of aggregate demand — fell 0.6 percent after increases of 2.1 percent in Q3 and 2.0 percent in Q2. Year-over-year sales tax receipts grew by 1.1 percent.
The labor force participation rate remained essentially unchanged for a third straight quarter, edging up from 63.7 percent in Q3 to 63.8 percent in Q4. That figure was below the Q4 2024 rate of 64.3 percent and trailed New England’s 64.9 percent, though it remained above the national rate of 62.5 percent.
The state’s gross domestic product expanded at an annualized rate of 4.4 percent in Q3, the most recent quarter for which data are available. That growth matched the national rate and slightly outpaced the New England regional average of 4.2 percent.
Among individual sectors, education and health services — Rhode Island’s largest — posted the biggest gains, adding 1,600 jobs. Leisure and hospitality added 800. On the other end, trade, transportation and utilities and professional and business services each shed 1,200 jobs, while government employment declined by 300. Manufacturing was flat, and financial services, construction and information services saw minimal change.
“There is a ‘tug-of-war’ in the data,” said Edinaldo Tebaldi, professor of economics and vice president of strategy at Bryant University. “While some are now calling this a recession, I see it as a high-stakes transition rather than freefall. Our path forward depends on whether growth in healthcare and education can continue to offset the losses we are seeing in other sectors.”
Michael DiBiase, president and CEO of RIPEC, said the drop in net sales tax receipts is particularly concerning.
“These headwinds underscore the need for policymakers to place greater emphasis on the state’s long-term competitiveness and policies that support sustained economic growth,” DiBiase said.
The briefing noted that Q4 data on labor force participation, resident employment and unemployment reflect only November and December. The U.S. Bureau of Labor Statistics did not release October data for those measures as a result of the federal government shutdown.
The Briefing is available here.
