Lardaro: R.I. teetering toward recession

RHODE ISLAND is teetering toward a recession due to an abysmal economic performance in April and continued economic weakness, University of Rhode Island economist and professor Leonard Lardaro said Monday.

PROVIDENCE – Rhode Island is teetering toward a recession due to an abysmal economic performance in April and continued economic weakness, University of Rhode Island economist and professor Leonard Lardaro said Monday 

The Current Conditions Index that Lardaro publishes each month had a contraction value of 33 in April, a decrease from the contraction value of 42 in March.  

A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.  

“I truly wish it was possible for me to say that this month’s reading was a “strong” 33, but I cannot,” Lardaro said. “Only four of the 12 CCI indicators improved in April and a couple of them barely managed to eke out gains, improving at rates far below what we had witnessed over the last year.” 

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Lardaro said the four indicators that showed improvement in April compared with a year ago were: manufacturing wage, government employment, retail sales and new unemployment insurance claims. He added that the new claims category was the only one of the five leading economic indicators that improved in April. Single-unit permits, employment service jobs, labor force and unemployment benefit exhaustion declined. 

“While this did follow four months of improvement, April was the slowest rate at which [new claims] has improved in quite a while, well below the consistent double-digit rates of past months,” Lardaro said. “Couple this with employment service jobs, a leading indicator of future employment [it includes temporary hires], which has now fallen for the last seven months at double-digit declines since January, and the picture emerges that layoffs are rising while hiring prospects have dimmed.” 

Lardaro said the two “star” indicators throughout the pandemic and post-pandemic period, retail sales and total manufacturing hours, faltered despite recording year-over-year gains in April. Retail sales barely improved, while total manufacturing hours have now declined for the last five months with both the length of the workweek and employment falling. 

Benefit exhaustions rose almost 50% in April, consistent with the month’s double-digit decline in private service-producing employment, Lardaro said. Rhode Island’s labor force fell in April for the 15th consecutive month, helping keep the unemployment rate at 3%, despite resident employment falling for the fourth straight month.  

“If we do have recession here, and I now place the odds of that as being fairly high, it will be one where aggregate activity masks remaining areas of strength, Lardaro said.  “Perhaps it might be called a ‘recession in a box,’ or ‘I can’t believe it’s not a recovery.’ Sadly, our current economic performance is entirely consistent with our state’s history of being FILO [First in, Last out].”

Year-over-year CCI indicators in April:  

  • Employment services jobs decreased by 12.6%
  • Government employment increased by 3%  
  • Labor force decreased by 0.9% 
  • Manufacturing hours declined by 1.7%  
  • Private services production employment decreased by 2%  
  • Retail sales increased by 0.5% 
  • Single-unit permits decreased by 31.8%  
  • Unemployment benefit exhaustions declined by 3.7%
  • U.S. consumer sentiment declined by 2.9%.

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