PROVIDENCE – The state’s economy expanded for the seventh consecutive month in October but will likely take two or three years to recover from the COVID-19 pandemic, University of Rhode Island economist Leonard Lardaro said on Monday.
The Rhode Island current conditions index he produces each month had a value of 83 in October, which is identical to the state CCI figure in September and a major improvement from a value of 17 a year ago.
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A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
Ten of 12 indicators that comprise the index improved year over year.
Lardaro is confident about the direction of Rhode Island’s economy, although he believes it will see an uneven road ahead.
“We are continuing to move forward – changes in economic indicators continue to be a mix of adverse pandemic effects being increasingly offset by the impacts of reopening much of our state’s economy, and, of course, monetary and fiscal policy,” he said. “This recovery will continue to be uneven and it will be two to three years before we return to normal, even with the sugar high from all the federal money.”
Lardaro said October’s labor force and resident employment imploded after an increase in September, when the state’s labor force and resident employment both exploded on a monthly basis — the labor force by a gain of 43,300 and resident employment by 44,000.
“Well, what explodes eventually implodes, and that’s what we saw in October, as our labor force fell by 26,300 while resident employment dropped 25,700 and payroll employment fell by 2,100,” he said.
According to the CCI report, Rhode Island’s labor force may have imploded compared to the previous month but it was still 3% higher than October 2020. The state’s unemployment rate rose from 5.2% to 5.4%.
Of the individual indicator performances, Lardaro said that retail sales remained the star CCI performer, rising by 20% from a year ago, its ninth consecutive double-digit increase.
Of the five leading indicators present in the CCI, once again only three improved in October with two turning in noteworthy performances. Total manufacturing hours, increased again at a double-digit rate at 15.7%, its seventh consecutive double-digit improvement.
Lardaro said that new claims, which reflect layoffs, fell by 65.5% from their value last October. This sounds impressive but in October 2020 it had risen by 370% percent from the prior year.
Year over year CCI indicator performance changes:
- Government employment increased 3.4%
- U.S. consumer sentiment declined 12.4%
- Single-unit permits increased 20.8%
- Retail sales rose 20%
- Employment services jobs decreased 0.3%
- Private services production employment rose 3.1%
- Total manufacturing hours rose 15.7%
- The state’s manufacturing wage rose 7.4%
- The state labor force grew 3.0%
- Benefit exhaustions declined 88.5%
- New claims declined 65.5%
- The state’s unemployment rate declined 1.9 percentage points
Rhode Island’s month-to-month CCI value was 58 once again, in expansion range, after several months of weakness.
“It is still well-below the regular CCI value,” Lardaro said. “Behind this number was a string of declining indicators such as the labor force and unemployment rate, U.S. consumer sentiment and government employment, a sign of possible slowing ahead.”
