PROVIDENCE – Rhode Island’s economy is in the early stages of a total recovery from the pandemic, University of Rhode Island economist and professor Leonard Lardaro said on Monday.
For the first time. Lardaro calculated The Rhode Island Current Conditions Index based on a two-year comparison, 2022 with 2020, and found reason to believe the state is making it back from the economic ravages of COVID-19. The calculation showed Rhode Island expansion range values began in March 2022 and continued through May, when compared to the same three months in 2020.
The usual year over year index he produces each month had a value of 67 in May, compared to 2021, same as it was in April. It marks the 14th month of continued expansion, but a step down from the first three months of 2022 when the value sat at 75.
A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
“So, while we have been inching beyond the effects of the pandemic for [14] months now based on the regular CCI, I believe that it is reasonable to conclude that Rhode Island’s true overall recovery has indeed begun.” Lardaro said. “That’s the good news. The bad news is that both the U.S. and Rhode Island economies are beginning to slow as the effects of monetary tightening begin to take hold.”
Only two of the five leading indicators improved in May, total manufacturing hours, which rose 4.9% and new unemployment claims, which improved dramatically with a 94% decrease. However, weakness in U.S consumer sentiment, single-unit permits and employment service jobs persisted. U.S. consumer sentiment has now failed to improve for 10 consecutive months. Retail sales and employment service jobs also fell for the fifth consecutive month.
“A number of economic indicators moved closer to or above their pre-pandemic levels” Lardaro said. “This improvement comes [amid] the reality of facing ever more difficult ‘comps’ [that has] become more apparent in recent months, making it increasingly difficult to sustain or increase momentum. In light of this reality, Rhode Island’s momentum has begun to slow a bit.”
The May monthly CCI fell dramatically to 42, compared to 92 in April. Lardaro said that if such monthly weakness persists, Rhode Island’s economy could begin to slow.
“At any rate, this reflects the uneven pace of activity we have and will be facing as we move further into 2022,” Lardaro said.
Year-over-year CCI indicator performance in May:
- Government employment increased 1.8%
- U.S. consumer sentiment declined 29.4%
- Single-unit permits declined 2.6%
- Retail sales rose 7.9%
- Employment services jobs decreased 3.1%
- Private services production employment rose 3.6%
- Total manufacturing hours increased 4.9%
- The state’s manufacturing wage rose 11%
- The state labor force declined 0.4%
- Benefit exhaustions declined 59.3%
- New unemployment claims declined 94.4%
- The state’s unemployment rate declined 3.1 percentage points.
