Lardaro Report: RI Economy Closes 1st Quarter on Note of Concern
Len Lardaro, URI Economist
Lardaro Report: RI Economy Closes 1st Quarter on Note of Concern
Rhode Island’s economy didn’t just begin to slow in the first quarter of this year. The Current Conditions Index has shown that since the end of 2015, economic performance here has been spotty at best, and consistently disappointing. Recently revised data from several other sources corroborate this. According to the US Bureau of Economic Analysis, economic growth for Rhode Island was 0 in 2016, 0.8 percent in 2017 and 0.6 percent in 2018. Remember, those growth rates are sequential, so not only were these well below values for both the US and New England, real GDP in 2019 remains little changed from where it was in 2015. According to the most recent readings of the CCI, we’re not exactly moving forward at a rapid rate, as March was the tenth consecutive month for which the CCI failed to exceed its year-earlier value. Worse yet, according to the Pew Charitable Foundation, Rhode Island was the only state in the country to have 0 real income growth for all of 2018. Then there were the labor market data revisions from a few months ago that showed sharply lower levels for both measures of employment (resident and payroll), indicating that as of March of 2019, both employment measures remained below their levels at the last cycle’s peak, all the way back in December of 2006! It’s little wonder why Rhode Island’s government insists on summarizing Rhode Island’s economic performance solely on the basis of its Unemployment Rate, which should have fallen due to robust and consistent economic growth. Sadly, for Rhode Island, this has become a virtually meaningless statistic due to the way it declined (a longer than decade-long fall in our Labor Force).
March’s performance did have a few bright spots, but only a few. The strongest indicator performance in March was once again Retail Sales, which has held up surprisingly well, growing by just under 10 percent. Rhode Island’s goods-producing sector fared poorly again in March. The Manufacturing Wage rose again (+2.1%), but this was only its third increase since September. New Claims, the most timely measure of layoffs, improved in March (-2.3%), which was only its sixth improvement in the last year. More critically, this was the only one of the CCI’s leading indicators to improve in March.
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Our state’s Labor Force reached its most recent peak last October and has failed to exceed that value ever since. In March, it fell again relative to its level a year ago (-0.3%). Accompanying this was yet another decrease in the labor force participation rate. While our state’s Unemployment Rate remained below 4 percent in March, the extremely tainted nature of this indicator was highlighted by the fact that this was accompanied by a declining Labor Force (monthly).
Government Employment rose over the year for a seventh consecutive month (+1.2%), Private Service-Producing Employment fell again (-0.1%), and Benefit Exhaustions, the timeliest measure of longer-term unemployment, fell by 12.7 percent.
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