URI Expert: RI Economy Getting Left Behind
Monday, March 12, 2012
Rhode Island’s labor force experienced a “more-horrible-than-we-knew” performance in January as the state’s economy suffered from yet another setback, according University of Rhode Island economist Dr. Leonard Lardaro.
Lardaro said the decline in the unemployment rate was not welcome news as employment service jobs fell for the tenth straight time while both private service-producing employment and government employment dipped again.
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 January at a 58 (out of 100). In 2011, Lardaro never valued the state above a 67. Its low point was a 42 last August.
“Rhode Island begins 2012 equipped with its newly revised labor market data. The prior data had painted a rather grim picture with Rhode Island’s economy being essentially ‘dead in the water’ for much of the second half of 2011,” Lardaro said. “I had hoped the new data would show that things here were materially better than what we had been led to believe, especially concerning the abysmal performances of our Labor Force, Unemployment Rate, and the two employment series, Resident and Payroll Employment.”
Bad Outweighs Good
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 actually improved compared to last month, US consumer sentiment, single-unit permits, retail sales, total manufacturing hours, manufacturing wage, benefit exhaustions and the unemployment rate.
But Lardaro’s report suggests the negatives significantly outweigh the positives for the state’s economy.
“I was alarmed by how much worse the actual performances of every one of those data series were,” he said. “To summarize this very succinctly: the ‘good stuff’ (the Labor Force, and both kinds of employment) was revised sharply lower while the ‘bad stuff’ (the Unemployment Rate) was revised significantly higher. In light of these new data, we need to rethink much of what we had thought about our state’s labor market performance.”
Revised Data “Highly Disappointing”
Lardaro said revised data shows the state’s economy struggled even more than suggested in previous reports.
“Based on these changes, Rhode Island’s economy was a bit more “dead in the water” than I had earlier thought,” he said. “In spite of this, our exceedingly tepid recovery did continue, albeit barely since the second half of 2011.”
Lardaro called the revised labor data “highly disappointing.”
“It should now be painfully obvious to anyone who analyzes these data that many if not most of Rhode Island’s economic problems are the result of its structural, not its cyclical, negatives,” he said.
So while the rest of the country’s economic spirits continue to improve, Lardaro said Rhode Island continues to struggle.
“At the present time, Rhode Island finds itself once again being left behind as the pace of national economic activity accelerates. The days when our leaders were able to rationalize away our problems have now officially ended.”