PROVIDENCE – University of Rhode Island economist Leonard Lardaro said he didn’t think Rhode Island’s economy could possibly get worse – until it did.
“Rhode Island has been very severely hit by the pandemic, both in terms of the incidence of infection [Rhode Island is No. 1 in the world for coronavirus cases per capita] and the economic damage we have experienced,” Lardaro wrote in the state’s monthly Current Conditions Index report for October, which was released Thursday.
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The index dropped to 17 in October after remaining at 25 between June and September. The October index is 58 points below the CCI value from a year ago. A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
Only two out of the 12 CCI indicators improved year-over-year in October, including retail sales and the manufacturing wage. Manufacturing wages, Lardaro wrote, have been climbing as of late, but its values actually reflect the loss of a significant number of service-sector jobs, which typically pay below-average wages.
Retail sales, however, have remained strong for the last several months, and is one of the most consistently performing CCI indicators.
Lardaro has recently written that it has been difficult to break down the state data in previous CCI reports, including this latest one.
“The sheer magnitude of the damage to Rhode Island and the rest of the U.S. has distorted much, if not most, of the economic data used to track the economy,” he wrote. “Worse yet, the sheer magnitude of recent decreases has distorted seasonal adjustments, making it even more difficult to follow the economy. Worse than worse: October is one of the months most likely to be revised when the new labor market data area released in February.”
He added, “It’s times like these that I envy weather forecasters!”
He said the most distinct data is the the number of “benefit exhaustions,” one of the CCI indicators, which rose by 1,317% compared with October 2019.
“I continue to believe that it will take three to five years before Rhode Island returns to pre-pandemic levels of activity because of a painfully slow recovery that will result from our ongoing lack of effective economic policy and the fact that our fate will lie largely beyond our control, determined by the COVID vaccine, monetary and fiscal policy,” he wrote.
Year-over-year changes in Rhode Island’s CCI indicators:
- Government employment declined 3.2%
- U.S. consumer sentiment declined 14.6%
- Single-unit permits decreased 21.0%
- Retail sales increased 6.4%
- Employment services jobs declined 16.0%
- Private service-production employment declined 8.8%
- Total manufacturing hours declined 6.0%
- The manufacturing wage increased 10.9%
- The labor force decreased 2.8%
- Benefit exhaustions increased 1,317.2%
- New claims increased 368.1%
- The unemployment rate increased 3.5 percentage points
Alexa Gagosz is a PBN staff writer. Contact her at Gagosz@PBN.com. You may also follow her on Twitter at @AlexaGagosz.
