KINGSTON – University of Rhode Island economist Leonard Lardaro said the Rhode Island economy “has shown substantial improvement over the past four months” as his Current Conditions Index returned to a two-year high in August.
Lardaro’s Current Conditions Index rose to 42 in August, the same reading as in June, after falling to 25 in July and standing at 17 in May, 8 in April and 0 in March. “Our state’s economy has regained its pulse,” he said.
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
The index uses a dozen national and local economic indicators to track the state’s economic performance. A reading of 0 would mean no indicators improved compared with a year earlier, while 100 would mean all 12 improved.
The index’s reading of 42 in August and June was its highest since June 2007, when it stood at 50. The next month the state fell into a recession now in its third year, according to Lardaro. Last year, the Current Conditions Index never rose above 8.
“While some of this can be attributed to weak [comparisons] from a year ago, which is what typically occurs as economies move out of recessions, it is clear that Rhode Island’s economy is now moving in the right direction, which should set the stage for a recovery next year,” Lardaro wrote.
Five of the 12 indicators showed improvement in August compared with a year earlier, including a rise in single-unit housing permits and a decline in new claims for unemployment benefits.
Lardaro also cast some positive light on the state’s record-high unemployment rate, which stood at 12.8 percent in August, saying it “can be partly explained as being the result of a rapidly [growing] labor force, as many jobless persons have reinitiated job search, resulting in their inclusion in the monthly rate.”
The size of the Rhode Island labor force has increased by 1.3 percent from a year ago, putting it slightly below its peak during the economic expansion of 2001-2007, while layoffs are “at levels far below their worst in this recession.”
The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economy. The index – based on 12 key economic indicators related to housing, retail sales, the employment situation and the labor supply – attained its maximum value of 100 points several times in 1984 and 1986. Additional information is available at members.cox.net/lardaro.
