Lardaro: Some positive economic signs but concerns too

ALTHOUGH THE September value reached expansion range, it remains unclear if Rhode Island has emerged from its “statistical recession,” University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report Wednesday. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Despite signs of economic expansion, it remains unclear if Rhode Island has emerged from its “statistical recession,” University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report Wednesday.

The index that Lardaro publishes each month had a expansion value of 58 in September, an improvement from the neutral range of 50 in August and after starting the year with six of the first seven months of contraction.

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

Seven of the 12 indicators used to compute the CCI improved in September from August. However, the five indicators that failed to improve, did so with disappointing values, making it too early to call if Rhode Island is moving out of its “statistical recession,” Lardaro said.

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“All we can do is hope national strength continues to move us forward and the large negatives provide us with easy comps in the next few months,” he said.

Lardaro added it is also unclear if the state will remain in the expansion range moving forward since only two of the five leading economic indicators contained in the CCI, employment service jobs and labor force, improved in September compared to previous month.

“While there were a few healthy indicator improvements, the negatives remained uncomfortably large,” Lardaro said. “What we have going for us is improving national economic momentum and fiscal stimulus from our state’s budget that has benefited so tremendously from federal funds. … Sadly, much of our future direction will be dictated by factors beyond our direct control, namely national monetary and fiscal trends.”

Retail sales, U.S. consumer sentiment and manufacturing wages were September’s strongest performers. New claims, reflective of layoffs, improved for the second month and while the state’s unemployment rate fell from 3.7% to 2.6% in September.

“A troubling combination still exists: Weakened hiring, rising but possibly levelling off layoffs and persons remaining unemployed for longer, exhausting their unemployment benefits,” Lardaro said. “This must improve if we are to move beyond our ‘statistical recession.’ ”

Other negative trends in September included a fall in total manufacturing hours, employment service jobs, benefit exhaustions and government unemployment.

Year-over-year CCI indicators in September:

  • Employment services jobs decreased by 7.3%.
  • Government employment decreased by 0.9%.
  • Labor force decreased by 0.55%.
  • Manufacturing hours declined by 7.9%.
  • Private services production employment decreased by 0.8%.
  • Retail sales increased by 5.8%.
  • Single-unit permits decreased by 32.2%.
  • Unemployment benefit exhaustions decreased by 0.8%.
  • Consumer sentiment increased by 16.0%.

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