URI Expert: State Nearing Double-Dip Recession
Monday, April 16, 2012
Rhode Island’s economy is in crisis and may be entering the earliest stages of a double-dip recession, according to University of Rhode Island economist Leonard Lardaro.
The negative outlook comes in the February edition of Lardaro’s Current Conditions Index, a monthly report card that ranks the state’s economic growth on a scale on 0 to 100 based on 12 key indicators. February’s score was 50, the fourth “neutral” rating in the last six months and a steep year-over-year drop from last February’s 67.
While Lardaro said he is not ready to say the state has entered a recession, "please don’t construe this as indicating that I believe things here are going well. Rhode Island’s labor market is in abysmal shape — just about everything is moving in the wrong direction," he warned.
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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.
Retail sales, manufacturing hours, manufacturing wage, benefits exhaustions, new claims and the unemployment rate each saw improvements, with retail sales showing “a great deal of momentum,” according to Lardaro.
But a reduction in the labor force as well as drop in new home construction is a cause for concern he said. While Rhode Island may still be considered in a recovery, the state is only hanging on to that label “by its finger nails.”
“Based on the information provided by the Current Conditions Index, most notably another neutral reading of 50 for February and failure to beat the year- earlier value, I believe it is reasonable to conclude that Rhode Island’s economy remains dead in the water,” Lardaro said.
Lardaro said the local economy being at a standstill is particularly concerning because it has coincided with an accelerating pace on national economic activity. He noted that the threats of bankruptcy for cities and towns has the state heading in the wrong direction and questioned whether politicians will address the problems.
“At this point, I can no longer rule out the possibility that Rhode Island has entered into the earliest stages of a double-dip recession,” Lardaro said. “I still believe that we are still in a recovery, but barely.”
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