Rhode Island Is in a “Statistical Recession” Claims URI Economist

Rhode Island Is in a “Statistical Recession” Claims URI Economist

A top economist at the University of Rhode Island claims that Rhode Island’s economy continues to decline and is now in a “statistical recession.”

Professor Leonard Lardaro, who has been measuring the Rhode Island economy for decades, has warned for the past few months that Rhode Island is in an economic decline.

The has made these claims even while Rhode Island has near-record low unemployment.

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Lardaro’s comments are in direct conflict with last week’s number released by the Rhode Island Department of Labor and Training (RIDLT), which reported a slight job loss but less than 3% unemployment.

“Rhode Island businesses lost 100 jobs in August as the state’s unemployment rate dropped to 2.7 percent. Over the year, jobs were down 6,900 from August 2022 and the unemployment rate was down seven-tenths of a percentage point. Through August, Rhode Island has recovered 94,400 or 87.2 percent of the 108,300 jobs lost during the Covid-19 shutdown,” reported RIDLT.

 

 

RIDLT reported other positive data:

- Number of unemployed Rhode Island residents — those residents classified as available for and actively seeking employment — was 15,200, down 600 from July.

- The number of unemployed residents decreased by 3,900 over the year.

- Employed Rhode Island residents was 555,700, up 1,200 over the month and up 4,100 over the year.

- Rhode Island labor force totaled 571,000 in August, up 700 over the month and up 300 from August 2022.

 

Lardaro’s Numbers

Lardaro has reported monthly his “Current Conditions Index” (CCI), which tracks 12 economic indicators since 1983.

“The July value, 33, is once again in the contraction range. Rhode Island's disappointing economic momentum thus continues, leading me to continue to believe that Rhode Island is in a statistical recession, not a ‘typical’ recession, due to a host of factors that would normally not be present were we moving toward a ‘typical’ recession,” said Lardaro about this month’s report.

According to the most recent CCI report released on Tuesday, “In July, the economic weakness in Rhode Island’s economy continued, extending the rather peculiar situation Rhode Island’s economy now finds itself in. There is a well-defined downward trajectory in Rhode Island’s economic momentum that has existed since late summer of 2022. My Current Conditions Index, which reflects cyclical economic momentum, has now registered either contraction or neutral values for all but one month since December of last year. The CCI for July was 33, as only four of twelve indicators improved. More concerning is the fact that monthly CCI values have failed to exceed their year-earlier values for eleven consecutive months. As can be seen from the table at the bottom of this page, there have been contraction values (below 50) for all but February this year. And, as I have discussed in reports over the last several months, accompanying these contraction CCI values have been very weak performances by individual indicators. Sadly, July is no exception to this.”

“Focusing on employment, there is a mixed picture, but still not a strong one. For payroll employment, the number of jobs in Rhode Island, this has now declined on a yearly basis for four consecutive months. Its downward trajectory accelerated in July. However, what most people don’t know is that the number of jobs lost is not the negative aggregate number released as the monthly employment change. That is the difference between jobs gained and jobs lost, which for July was a decrease of 5,600. This actually breaks down to 3,100 jobs gained but 8,700 jobs lost. The other employment measure, resident employment (number of employed RI residents), finally rose on a yearly basis, but barely," reports Lardaro's CCI.

Lardaro forewarns, “As the national economy has been rebounding of late, let’s hope that Rhode Island’s economy will also gain cyclical momentum. But what will happen when RI’s budget surpluses disappear?”