Report: Rhode Island’s Economy is Slowing

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Monday, July 16, 2012

Dan McGowan, GoLocalProv News Editor

The state’s economic recovery is following the national trend as it continues to lose momentum, according to a report issued by University of Rhode Island professor Dr. Leonard Lardaro.

Lardaro said May was the 27th month of the recovery but noted that improvements month over month have been marginal.

Every month, Lardaro releases his “Current Conditions Index (CCI),” which analyzes the state’s economy based on 12 vital indicators. He valued the month of May at a 58/67 (out of 100), which takes into account the current data and the data he predicts will be revised. In 2011, Lardaro never valued the state above a 67. Its low point was a 42 last August.

“Rhode Island’s economic outlook in May is similar to that from April: the current tepid recovery is continuing, although signs of a loss of momentum have become more readily apparent,” Lardaro said. “The good news is that Rhode Island is still in the recovery that began in February of 2010, which as of May reached its 27th month. The concerning news is that like the US, our rate of improvement has slowed.”

Retail Sales Up, but so were Layoffs

Lardaro’s monthly analysis 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.

Seven of those indicators improved as compared to the same time last year: US consumer sentiment, single-unit permits, retail sales, total manufacturing hours, manufacturing wage, benefit exhaustions and the unemployment rate.

The biggest boost was retail sales, which increased by 9.9 percent, according to Lardaro. It was the ninth consecutive month retail sales went up.

“To some extent this is weather related.” Lardaro said. “The skilled Rhode Islanders we rent out to neighboring states who bring their income home with them also directly impacts this indicator. Overall, such substantial Retail Sales momentum argues against making any recession call.”

But not all of the key indicators improved, according to Lardaro. New claims, which reflects the number of layoffs over the month, jumped by 8.6 percent, the first increase in six months. Lardaro also noted that while the unemployment rate dipped slightly, the labor force also decreased by 1.3 percent.

Things Won’t Magically get Better

Lardaro’s report comes just days after CNBC rated Rhode Island the worst state in the country to do business. The state ranked last for infrastructure & transportation, 49th for the economy and business friendliness and 46th for workforce, a 20-spot slide from 2011.

Overall, the state might not be on the verge of a double-dip recessions (as some economists have predicted), but that doesn’t mean leadership in the state doesn’t need to address some of the state’s key problems, Lardaro said.

I keep hearing many of our state’s leaders say things like ‘When the recession is over’ and ‘When things turn around,’” Lardaro said. “These persons are badly out of touch with our state’s economic reality. Rhode Island is in a recovery and has been so since February of 2010. Things have already turned around — this is it! They need to acknowledge the sad reality that we’re more likely to continue slowing from here, not magically get better. This would be a very good time for them to finally begin implementing needed changes.”
 

Dan McGowan can be reached at dmcgowan@golocalprov.com.

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