SOUTH KINGSTOWN – Despite a recent plateau, it is still possible that the Rhode Island economy will recover by the end of the third quarter, University of Rhode Island economist Leonard Lardaro said Monday.
“Rhode Island’s economy continues to ‘knock on the door’ of the end of its three-year recession,” Lardaro said.
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Lardaro’s Current Conditions Index for May remained at 50 for the second consecutive month, still a year-over-year improvement from last May’s reading of 17.
The Current Conditions Index uses 12 national and local economic indicators to evaluate Rhode Island’s economic performance. May’s reading of 50 means that half of the dozen indicators improved compared with a year earlier.
“It must be understood, however, that while there continue to be negative downdrafts for Rhode Island’s economy, the recent Census hiring provided some positive offset,” Lardaro wrote in his report.
May’s government employment indicator saw a “rare” increase of 1.9 percent due to the Census hiring. If the Census hiring is excluded, the May CCI value would be 42, providing an average reading of 50 over the past few months.
Additionally, benefit exhaustions, an indicator of long-term unemployment, continued to improve as May saw a decrease of 23.1 percent. Combined with a state unemployment rate of 12.3 percent – up 15 percent from last year – the impression of the state’s overall labor market is mixed.
Lardaro continues to observe evidence of a manufacturing rebound in the Ocean State, citing a year-over-year decline in total manufacturing hours of only 0.5 percent, and an increase in manufacturing wages for the third consecutive month.
Consumer sentiment continued to rise for a 14th consecutive month in May (although it hit a snag in June), while retail sales were up an estimated 3.9 percent. This is the fourth month in a row that retail sales have improved over the previous year.
“Large state budget deficits and a slowing pace of national economic activity will certainly provide headwinds for us,” said Lardaro. “The most relevant question is therefore: What is our state’s engine of growth?”
Additional information is available at members.cox.net/lardaro.
