his most recent CCI report. / " title="HIS INDEX of current conditions in Rhode Island has been trending downward, Lardaro noted in his most recent CCI report. /"/>A longer version of this article, including details of the 2008 forecast, will be published in the Jan. 14 Providence Business News.
PROVIDENCE – The state’s projected $450 million budget deficit will probably drag Rhode Island into a recession in 2008, and keep it there while the rest of the country sees economic improvements later this year, a University of Rhode Island economist told the Smaller Business Association of New England this morning.
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Leonard Lardaro’s 7:30 seminar at the Providence Marriott was entitled “Economic Forecast 2008: Will Rhode Island avoid a recession?” In fact, the URI professor told the gathering of SBANE members and others, the Ocean State recession may have arrived already.
“I can’t really nail it down for a few months, but we’re probably in the early stages,” based on the leading indicators in his monthly Current Conditions Index, Lardaro told Providence Business News. The standard definition of recession is two or more months of economic decline, he noted. In Rhode Island, the number of new residential building permits declined 46 percent in the third quarter of 2007, while employment services (including temporary positions) fell 10.5 percent.
Right now, Lardaro said, the national economy is slowing and Rhode Island is slowing with it. But he predicts improvements in the second half of the year – as the manufacturing and housing industries make a slow recovery, federal interest-rate cuts start to take effect and U.S. exports accelerate – that he thinks will be enough to prevent a nationwide recession.
Rhode Island is a different story, he said – in part because of the state government’s structural deficit.
The SBANE members and others attending the session were hardly surprised by Lardaro’s gloomy predictions.
“There is still new business out there,” said CPA Richard Kaplan, a principal at Yarlas, Kaplan, Santilli & Moran in Providence. “But overall, the business activity has dropped and the optimism has dropped.”
The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate. Additional information, including historic data, is available at members.cox.net/lardaro/current.
To learn more about the Smaller Business Association of New England and its programs, or to nominate a company for SBANE’s 2008 New England Innovation Awards, visit www.sbane.org.
