PROVIDENCE – Rhode Island appears to be moving toward the end of a recession, University of Rhode Island economist and professor Leonard Lardaro said Monday in his monthly Current Conditions Index report.
The index had a contractual value of 42 in November, same as October. A CCI value above 50 indicates an economic expansion while a value below 50 indicates economic contraction. However, Lardaro said key improvements in some of the CCI's monthly indicators signal the economy is improving.
Lardaro previously stated that Rhode Island entered a recession in September because its economy had been unable to break past the CCI neutral value of 50. However, other state economists disagree with Lardaro, including Edinaldo Tebaldi, professor of economics and vice president of strategy at Bryant University, and Michael DiBiase, CEO and president of the Rhode Island Public Expenditure Council.
“I find little compelling evidence to refute my ongoing conclusion that Rhode Island is in a recession,” Lardaro said. “Remember, a recession is defined based on the sustainability of overall economic activity, not levels. But while Rhode Island’s economy has recently been unable to break through the ‘ceiling’ of the CCI’s neutral value of 50, it is moving closer to doing so, based on a monthly data.”
Five of the 12 CCI indicators improved year over year in November, Lardaro said.
Retail sales improved in November after falling in October and new unemployment claims, which Lardaro said is reflective of layoffs, fell by 9.4% for its first improvement since July and only third time since November 2024.
“Hopefully, the flow into layoffs will continue to slow, a welcome change,” he said.
However, not all was well on the employment side of the state’s economy, according to Lardaro.
Government employment declined again in November, negatively impacted by losses at the federal level, Lardaro said. Private service-producing employment fell 0.2% year over year, following a string of sub-1% growth rates since January 2025. Employment service jobs, which Lardaro said is a leading labor indicator that deals with the future, suffered its second annual decline, falling by 1.1% year over year.
The data on employment service jobs, "combined with that of new claims, suggests the combination of low or slowing hires but not as many persons being fired, or being are laid off,” Lardaro said. “This is consistent with what we have been observing at the national level. benefit exhaustions, reflective of longer-term unemployment, rose yet again, by 6%, sustaining its clear uptrend – remember: we want exhaustions to decline. So, there might be some labor market stasis on the short-term end, but it is very clear that longer-term unemployment remains a problem in Rhode Island.”
Although the state’s unemployment rate fell to 4.3% in November, this occurred with a declining annual labor force. Lardaro said this is an all-too-familiar pattern for Rhode Island.
“The situation is more encouraging on a monthly basis though,” Lardaro said. “While the labor force has now fallen for every month since March on an annual basis, it has improved on a monthly basis since July, a trend that if continued, could end its string of annual declines. So, on a monthly basis, a rising Labor Force accompanying a falling (monthly) unemployment rate is not necessarily as negative as it might appear.”
Rhode Island’s manufacturing sector, which Lardaro calls the cyclically sensitive part of the state’s economy, held up better than it did overall nationally. Total manufacturing hours across the state grew at a healthy 4.2% following an above 4% growth last month. The manufacturing wage increased strongly year over year in November by 1.8%.
“So, the question as to how long we will remain in a recession remains,” Lardaro said. “If, as many expect, national activity will strengthen this year, that could be enough to move us out of recession. Upcoming data revisions should be very telling.”
Year-over-year CCI indicators in November:
- Employment-service jobs decreased by 1.1%.
- Government employment decreased by 0.8%.
- Labor force decreased by 0.1%.
- Total manufacturing hours increased by 4.2%.
- Manufacturing wages increased by 1.8%.
- New unemployment claims decreased by 9.4%.
- Private-service-producing employment decreased by 0.2%.
- Retail sales increased by 1.7%.
- Single-unit permits decreased by 3.1%.
- Unemployment benefit exhaustions increased by 6%.
- Unemployment rate decreased by 0.2%.
- U.S. consumer sentiment decreased 28.9%.
Several good points and very interesting.