Is Rhode Island’s Economy Improving—or Headed Toward a Recession
Tuesday, July 19, 2022
While Rhode Island’s economy is enjoying near record low unemployment, there are a number of indicators that make economic projections more complex.
Inflation across the board is at a 40-year high, housing prices are at record highs, and unemployment is at near record lows.
Confused? The numbers are pointing in a multitude of directions.
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RI Employment
“Rhode Island’s economy continued to improve in May, its fourteenth consecutive month of expansion (or restoration) based on the Current Conditions Index, as a number of economic indicators move closer to or above their pre-pandemic levels,” said Leonard Lardaro, URI economist and author of the Current Condition Index, the month measure of the RI economy.
“Along with this improvement comes the reality of facing ever more difficult “comps,” which has become more apparent in recent months, making it increasingly difficult to sustain or increase momentum. In light of this reality, Rhode Island’s momentum has begun to slow a bit,” said Lardaro.
Rhode Island’s seasonally adjusted unemployment rate was 2.9 percent in May, falling below 3.0 percent for the first time in over thirty years, the Department of Labor and Training announced Thursday. The May rate was down three-tenths of a percentage point from the April rate of 3.2 percent. Last year the rate was 6.0 percent in May.
The number of employed Rhode Island residents was 553,600, up 2,600 over the month and up 15,300 over the year. Since April 2020, the number of employed Rhode Island residents is up 107,500.
The U.S. unemployment rate was 3.6 percent in May, unchanged from April. The U.S. rate was 5.8 percent in May 2021.
A feature in the Wall Street Journal raises the possibility that the country could face a recession that includes low unemployment -- something that functionally has not happened before.
"Analysts sometimes talked about 'jobless recoveries' after past recessions, in which economic output rose but employers kept shedding workers. The first half of 2022 was the mirror image—a 'jobful' downturn, in which output fell and companies kept hiring. Whether it will spiral into a fuller and deeper recession isn’t known, though a growing number of economists believe it will."
Working Two Full-Time Jobs
But across the country, the job numbers are far more complex due to families trying to wrestle with inflation.
Now, a record number of Americans hold two full-time positions more than at any other point, according to the Bureau of Labor Statistics, which began collecting this data in 1994.
The BLS defines a full-time position as more than 35 hours per week at one job, so that's at least 70 hours for the workers in question. 426,000 Americans worked that much in June, compared to 308,000 in February 2020, according to the St. Louis Federal Reserve, as cited by Business Insider.
Trends in Rhode Island
According to Lardaro, "I believe that it is reasonable to conclude that Rhode Island’s true overall recovery has indeed begun. That’s the good news. The bad news is that both the US and Rhode Island economies are beginning to slow as the effects of monetary tightening begin to take hold."
And Lardaro warns in looking at the change in monthly data, "Should such monthly weakness persist, and this is by no means a certainty, Rhode Island’s economy could begin to slow. At any rate, this reflects the uneven pace of activity we have and will be facing as we move further into 2022."
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