Lardaro: Rhode Island’s economy is beginning to recover

PROVIDENCE – Rhode Island’s economy expanded for the first time in a long time year over year in April, especially in retail sales, payroll employment, and single-unit permits, according to University of Rhode Island economist Leonard Lardaro.

“April just might be the beginning of Rhode Island’s recovery from the pandemic,” said Lardaro. “While what we have been experiencing is not a recession in the usual sense of a cyclical decline, we are nonetheless continuing to move beyond what is more aptly described as a suppression, the forced shutting down of our state’s economy. Whatever we call it, this time really will be different, based on all the monetary and fiscal stimulus, as well as the reopening of large segments of our state’s economy. The path back to the pre-pandemic economy should be more rapid than has been the case in the past, which is particularly good news to Rhode Island.”

The Current Conditions Index value for Rhode Island increased to 75 from a value of eight one year prior. A value above 50 indicates expansion, while a value below 50 indicates contraction.

Year over year, nine of the 12 indicators that comprise the CCI improved, including retail sales, consumer sentiment, single-unit permits, payroll employment, employment services jobs, manufacturing hours and the manufacturing wage. The other few indicators worsened over the year.

Along with the expansion, the state saw improvement month to month. Economic indicators in the index showed signs of improvement from March. The monthly CCI value was again 75, indicating a trend toward consistent expansion, Lardaro said.

“Most of the indicators showed what appears to be impressive improvement relative to last April, but that was because the values of those indicators a year ago were so diminished,” said Lardaro. “April might mark the beginning of Rhode Island’s recovery from the pandemic. Obviously, we need to see a consistent pattern of expansion values before that call can be made.”

“Employment services jobs, for example, a leading labor market indicator, improved by 37.2 percent in April,” he said. “But last April, it had fallen by 33.4 percent relative to a year earlier. How do we not beat that?”

Lardaro said that “unlike the only recently improving indicators, retail sales, the ‘star’ indicator throughout the pandemic, remained very strong, growing by 53.9 percent versus last April, which showed a decline of 17.5 percent.”

Year-over-year CCI indicator performance in April:

• Government employment declined 1.7%
• U.S. consumer sentiment increased 23.1%
• Single-unit permits increased 91.7%
• Retail sales increased 53.9%
• Employment services jobs increased 37.2%
• Private service production employment increased 19.9%
• Total manufacturing hours increased 24.9%
• Manufacturing wage increased 7.4%
• The labor force declined 1.1%
• Benefit exhaustions increased 18.5%
• New claims declined 63.3%
• The unemployment rate decreased 11.1 percentage points

Lardaro said that before getting too carried away with April’s performance, the ‘comps’ for this month last year, were exceedingly weak. “Our state’s economy had fallen so far a year ago that it was virtually impossible for it to decline much further,” he said. “But that’s how recoveries typically start — things fall so far, it is almost impossible for them to decline any further.”

Cassius Shuman is a PBN staff writer. You may reach him at Shuman@PBN.com.