Lardaro: R.I. remains in a statistical recession

UNIVERSITY OF RHODE ISLAND economist and professor Leonard Lardaro said Thursday Rhode Island continues to be in a statistical recession a statistical recession because the aggregate state data is misleading. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Rhode Island continues to be in a statistical recession, but the effects have been blunted by federal funding and budget surpluses, University of Rhode Island economist and professor Leonard Lardaro said Thursday.

Lardaro emphasized it is not “typical” at this point, due to the effects of massive monetary and fiscal stimulus and a host of other factors that have the state in a far better position than would normally be the case at this stage of a recession.

“Things today are vastly different from what normally exists when moving into a recession, largely the result of massive amounts of monetary and fiscal stimulus, state budget surpluses related to national fiscal policy, pandemic period savings, capital gains from home equity and the stock market and several other effects, some related to the Russia-Ukraine war,” Lardaro said. “The result is that individuals and companies overall in our state are in a much stronger position.”

The Current Conditions Index that Lardaro publishes each month had a contraction value of 42 in June, an increase from 33 in May with five of 12 indicators, including only one of its five leading indicators, improving year over year.

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“The CCI has now failed to exceed its year-earlier value for 11 of the last 12 months,” Lardaro said. “Specifically, segments of our state’s economy impacted by the higher income levels continue to do quite well. However, the story is very different for average to below- average income Rhode Islanders.”

Four of the five CCI leading indicators fared badly in June. Total manufacturing hours fell for the seventh consecutive month; employment service jobs have fallen every month since October; new claims have been on an uptrend since November; the labor force fell for the 17th consecutive month and single-use permits have fallen at double-digit rates since October.

U.S. consumer sentiment, the sole leading indicator that did well in June, has now risen two consecutive months.

“It is possible that our economy might bounce back from this predicament, since the strength derived from the earlier-mentioned factors has yet to disappear. Only when conditions return to their ‘typical’ state will we be able to determine whether or not we have in fact dodged a typical recession,” Lardaro said.

Year-over-year CCI indicators in June:

  • Employment services jobs decreased by 10.4%.
  • Government employment increased by 3.6%.
  • Labor force decreased by 0.5%.
  • Manufacturing hours declined by 2.1%.
  • Private services production employment decreased by 1.1%.
  • Retail sales increased by 4.8%.
  • Single-unit permits decreased by 10.9%.
  • Unemployment benefit exhaustions increased by 32.1%.
  • Consumer sentiment increased by 28.5%.

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