Lardaro: Disappointing October keeps R.I. in ‘statistical recession’

AFTER A disappointing October, Rhode Island remains in a “statistical recession,” University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report Tuesday. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – After a disappointing October, Rhode Island remains in a “statistical recession,” University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report Tuesday.

The index that Lardaro publishes each month had a neutral value of 50 in October, falling back from the expansion range of 58 in September.

October marked the 14th consecutive month the CCI value failed to improve year over year.

A CCI value below 50 indicates economic contraction, while a value above 50 indicates an expansion.

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“This is not the end of the world, but it is somewhat of a setback in terms of the cyclical momentum of Rhode Island’s economy,” Lardaro said. “What all these numbers reflect is the uneven nature of our state’s current economic climate, where in spite of parts of the economy not performing well on average, there are still areas of strength.”

Only six of the 12 indicators used to compute the CCI, government employment, U.S. consumer sentiment, retail sales, manufacturing wage, labor force and unemployment rate improved year over year.

Lardaro said the best news in October was that the state’s labor force rose for the second straight month.

“This will help ease labor shortages and could moderate wage growth,” Lardaro said. “The most important thing, however, is that when the labor force rises, persons who are unemployed enter or re-enter the labor force, often causing the unemployment rate to increase. So, increases in the unemployment rate do not necessarily signal economic weakness, as long as they are accompanied by an increased labor force.”

Retail sales remain strong, Lardaro said. That indicator’s 5.9% rise year over year in light of the housing weakness was encouraging despite the year over year declines in single-use permits.

However, it was not difficult to find negatives in the October results, Lardaro said.

New claims, reflective of layoffs, failed to improve after falling for two months, total manufacturing hours fell for the 11th consecutive month and employment-service jobs declined for the 13th-straight month, Lardaro said.

Single-unit permits declined 8.8% and private-service-producing employment dropped for the seventh-straight month. Benefit exhaustions, which reflect long-term unemployment saw its seventh consecutive double-digit increase.

“There were several strong indicator improvements this month, but the indicators that failed to improve did so with very disappointing values that have generally been sustained,” Lardaro said. “However, several critical non-CCI indicators are showing promise. Revisions to the labor market data should shed light on whether this divergence is accurate or not. Let’s hope those revisions are not as brutal as those of last year!”

Year-over-year CCI indicators in October:

  • Consumer sentiment increased by 6.6%.
  • Employment-services jobs decreased by 5.5%.
  • Government employment increased by 1.1%.
  • Labor force increased by 1%.
  • Manufacturing hours declined by 4%.
  • Private-services-production employment decreased by 0.9%.
  • Retail sales increased by 5.9%.
  • Single-unit permits decreased by 8.8%.
  • Unemployment benefit exhaustions increased by 34.7%.

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