Warnings Are Growing About RI’s Economy

Warnings Are Growing About RI’s Economy

The warnings are mounting about the Rhode Island economy and Governor Dan McKee’s management.

The only recent good news may actually be bad news.

The McKee administration announced this week that the number of “Jobs at Rhode Island businesses rose by 500 in July,” but that is not exactly true.

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In reality, the gain of 500 jobs was due to 700 jobs in the Government sector. All three branches, Local (+400), State (+200), and Federal (+100), added jobs in July.

The private sector lost jobs for the month.

The unemployment rate remained stagnant at 4.8% in July.

 

Recession?

University of Rhode Island economist Leonard Lardaro warns that the economy has stagnated and may be in a recession.

Lardaro’s monthly measure of the strength of Rhode Island’s economy is titled the Current Condition Index. The economy is scored 0-100.

“The June value, 42, remained in contraction range, as has been the case for most of 2025. Were it not for the tariff-induced uncertainties that have frozen activity, I would have made a recession call at this point. But I expect that when those uncertainties moderate or are eliminated, economic activity will pick up, possibly substantially. At that point, it will be easier to consider a recession call,” said Lardaro.

 

Call for Action

Ten days ago, the Rhode Island Public Expenditure Council flagged a number of concerning trends for the second quarter in Rhode Island.

The organization is calling on McKee and other policymakers to take action.

“Rhode Island’s labor force participation rate declined for the fourth consecutive quarter, reaching 63.7 percent in Q2 2025. Meanwhile, the number of employed Rhode Islanders fell by 3,300 (0.6 percent) quarter-over-quarter and by 6,900 (1.2 percent) year-over-year, reversing gains made during 2023 and the first two quarters of 2024. Rhode Island’s unemployment rate rose to 4.9 percent and has now either risen or remained unchanged for eight straight quarters. Rhode Island’s unemployment rate exceeded both New England and the U.S. for the sixth consecutive quarter,” wrote RIPEC. 

“The data this quarter reflect growing headwinds for Rhode Island’s economy and merit attention from Rhode Island policymakers and businesses,” said Michael DiBiase, President and CEO of RIPEC. “While some sectors continue to add jobs and net sales tax receipts indicate some growth in consumer demand, the broader trend in employment and labor force participation suggests that we are entering a period of increased uncertainty.”