PROVIDENCE – University of Rhode Island economist Leonard Lardaro said he hopes April is the “absolute bottom” for the struggling economies of the state and nation.
The carefully managed health measures that have been implemented to contain the virus, such as social distancing and isolation, have led to many businesses closing, as mandated by state and federal governments.
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“What we are witnessing is not a cyclical phenomenon,” wrote Lardaro in his Current Conditions Index report released on Thursday. “It is the definition of an exogenous shock negatively impacting the economy.”
The state had a CCI value of 8, marking a 42-point decrease from last April and a 25-point decrease from March’s CCI value. Lardaro said the last time the CCI was this low was April of 2009.
Only one of the index’s 12 indicators improved, which was manufacturing wages, which increased 1.5% year over year.
According to the economist, the state’s employment had failed to meet the prior high of late 2006 before the pandemic hit. Since the coronavirus crisis, resident employment fell to recession levels that have not been seen since the early 1980s. He noted that while Rhode Island begins to reopen in phases, the state will quickly move away from the dramatic number of those left jobless, but a full recovery will be primarily determined by both a potential second wave of infections and how long it takes before there is an effective vaccination.
Lardaro outlined that on top of the already tense economic climate amid the pandemic, the state has been burdened with structural issues associated with the business climate that was not dealt with in the most recent recovery- or those before that either.
“Rhode Island has to reinvent its economy and adapt its economic policy making to the 21st century if it is to succeed in this new environment,” wrote Lardaro and said that the state should use this crisis as an opportunity not to be wasted. “The days of running our state as we have for the past 40 years and hiding behind an artificially low unemployment rate are behind us.”
Eleven of the index’s indicators did not improve year after year, including retail sales, which fell by 17.4% from last April, following a 13.7% decline in March. Lardaro wrote that US consumer sentiment fell by 26.1%, benefit exhaustions rose by 8.9% and new claims rose by 1,623.4% in April.
Year-over-year changes in Rhode Island’s CCI indicators:
- Government employment declined 1.8%
- U.S. consumer sentiment declined 26.1%
- Single-unit permits declined 11.8%
- Retail sales declined 17.4%
- Employment services jobs declined 44.2%
- Private service-production employment declined 22.8%
- Total manufacturing hours declined 12.6%
- The manufacturing wage increased 1.5%
- The labor force declined 4.3%
- Benefit exhaustions increased 8.9%
- New claims increased 1,623.4%
- The unemployment rate increased 13.4 percentage points
Alexa Gagosz is a PBN staff writer. You may reach her at Gagosz@PBN.com.
