Rhode Island may be finding its way out of recession, says URI economist Lardaro in new monthly report

Rhode Island’s economy may be showing signs of pulling out of recession—but the latest numbers offer more reason for cautious optimism before any celebration.

The state’s economic performance improved in May, according to University of Rhode Island economist Leonard Lardaro, with several key indicators suggesting that the long period of contraction may be beginning to ease.

University of Rhode Island economist Leonard Lardaro’s May’s Current Conditions Index value, at 50, improved over April’s 42.

It was also the second time in the last three months that a monthly CCI showed 50, which is a neutral value—above 50 is expansion and below is contraction.

The Current Conditions Index, created by Lardaro, measures the strength of the present economic climate in Rhode Island by following the behavior of 12 indicators

Five of the CCI’s 12 economic indicators improved in May relative to a year ago, and it was only the fifth time in the last 17 months that the CCI was at 50 or better. March’s CCI, originally at 42, was revised to 50 based on new data. However, despite May’s data containing a number of disappointments, Lardaro says there is some basis for optimism that Rhode Island’s economy is getting out of its recession.

Retail Sales, a critical economic indicator that has been a strength through almost the entire post-pandemic period, grew by 6.4% in May.

Total Manufacturing Hours rose by a “healthy” 6.7%, Lardaro says, sustaining its growth.

Manufacturing Wage also grew by 1.1%—the second time in the last six months it has occurred.

New Claims, which is related to layoffs, dropped by a double-digit rate of 26.4%, its fifth improvement in the last seven months, Lardaro says.

Benefits Exhaustion, which indicates long-term unemployment, decreased by 9.1%—improving for the fourth time in the last five months.

Employment Service Jobs, a leading labor market indicator, fell by 1.4%, continuing its downward trend. U.S. Consumer Sentiment continued its consistent monthly declines, dropping by 13.6%, Lardaro says.

Single-Unit Permits, related to new home construction, fell back after a two-month climb, dropping by 10.5% in May.

Government Employment also fell by 1.2%, attributed to declines in federal government employment, Lardaro says, while Private Service-Producing Employment, a proxy for service-sector employment, dropped by 0.6%.

Taken together, the May numbers paint a mixed picture: Rhode Island has not yet returned to economic expansion, but several important indicators are moving in the right direction. With the CCI reaching the neutral mark of 50 for the second time in three months, Lardaro says there is now at least some basis for optimism that the state may be beginning to emerge from recession.