URI Expert: State’s ‘Tepid Recovery’ Continues
Monday, August 13, 2012
University of Rhode Island economist Dr. Leonard Lardaro hates to say he told you so, but he told you so.
As doom-and-gloom stories hit about the state being on the verge of a double-dip recession in recent months, Lardaro warned that errors in labor market data were causing some experts to panic. Then, earlier this month, Governor Chafee’s office reported that the state had actually ended the first quarter with 7,000 more jobs than originally reported.
But that doesn’t mean all is well with the state’s economy, which still has an official unemployment rate of 10.9 percent, Lardaro writes in his monthly briefing released today.
“What do we actually know overall about Rhode Island’s current economic performance,” Lardaro said. “Rhode Island’s economy continues to be in a tepid recovery that began in February of 2010, now 28 months old. While economic reality here is far better than what the “official” data show, the non-flawed data indicate that this recovery displayed some loss of momentum during the second quarter that will likely continue moving forward.”
Lardaro’s comments come in the June edition of his Current Conditions Index (CCI), a monthly report card that ranks the state’s economic growth on a scale on 0 to 100 based on 12 key indicators. June’s score, which takes into account what he calls flawed labor market data with two indicators, was 67/75, the best of the year.
Lardaro’s monthly breakdown takes into account government employment, US consumer sentiment, single-unit housing permits, retail sales, employment services jobs, private service-producing employment, total manufacturing hours, manufacturing wage, labor force, benefit exhaustions, new claims, and the unemployment rate.
According to Lardaro, US consumer sentiment single-unit housing permits, retail sales, total manufacturing hours, manufacturing wage, benefit exhaustions, new claims, and the unemployment rate all improved compared to last year.
Still, the economist noted that Private Service-Producing Employment “has slowed dramatically over the past two months” and the labor force again decreased by 1.5 percent compared to last June. Government employment and employment services jobs were also down during the month.
So what does it all mean?
Lardaro said that even though economic growth in Rhode Island slowed up during the second quarter of 2012, “the June CCI shows that a surprising amount of momentum remains.” He said the state could benefit if the nation’s economic climate improves over the next several months, but noted that the state may still actually have some momentum.
Even if the US slows, dragged down by Europe’s recession and slower Asian growth, our momentum since the second half of 2011 will serve as a welcome buffer against possibly dramatic downside declines,” he said.