Rhode Island in a Recession. Weak Economic Indicators. Tricky Call – URI Economist Lardaro

URI’s longtime economic analyst says the data show recession-level weakness — yet he admits the verdict isn’t clear-cut. Rhode Island’s economic performance for August plummeted and the state is now in a recession – that’s the proclamation on October 14th of of University of Rhode Island economist Leonard Lardaro.

Recent reports suggest Rhode Island is in a recession, or at least headed into one. Lardaro says that Rhode Island’s economy “is now in a recession”, that likely began in December 2024.

However, he also notes that drawing firm conclusions is tricky, especially given uncertainties related to trade tariffs and external factors. Some improvement in economic indicators (e.g. in July) has made the question less clear—the “recession call” is debated.

Other than Lardaro, both the RI Public Expenditure Council (RIPEC) and Moody’s Analytics have leaned to this direction.

• RIPEC flagged “growing headwinds” in Rhode Island’s economy. They pointed to troubling signs such as a declining labor force participation rate, employment falling quarter-over-quarter and year-over-year, and the state’s unemployment rate exceeding that of New England and the U.S. While RIPEC doesn’t clearly say “Rhode Island is in a recession,” their language suggests they see things moving in that direction.

• Moody’s Analytics called the situation “recession-adjacent” for Rhode Island, warning that “recession risks remain very high”, taking a more cautious phrase than “in recession,” but it aligns with the suggestion of imminent economic contraction.

In making this statement, Lardaro notes the August’s CCI value, at 33, matched the marks set in June and February. It is the fifth time in eight months during 2025 that the value has been below 50, with all eight values being below what they were a year ago.

Lardaro says Rhode Island’s recession likely began in December 2024 and that national growth will clearly be slowing this year. Depending on how the tariff war plays out, he says the outlook could be even more negative than it has been up to this point.

For August, just four of the 12 economic indicators improved relative to a year ago. While there were three relatively strong indicator performances, Lardaro says most others were painfully weak:

Economic Indicators

Retail Sales that has been a strength through almost the entire post-pandemic period, rose by 4.5%

Total Manufacturing Hours grew at 2.6%, considered very strong as both employment and the workweek expanded

Manufacturing Wage also increased by 1.7%, but Lardaro calls its recent performance “choppy”

Benefits Exhaustion, which indicates long-term unemployment, rose in August by 30.7%

New Claims for unemployment insurance, which reflects layoffs, increased by 8.86%

Employment Service Jobs, a leading labor market indicator, was flat in August

Single-Use Permits, related to new home construction, dropped by 9.1%

Labor Force in RI also fell by 0.4%,

US Consumer Sentiment declined by 14.6%

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Lardaro’s Current Conditions Index is in its 29th volume, and the analysis is from August of this year:

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In sending this information out, Lardaro adds some additional points from a September analysis:

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Are we alone on the recession slide in New England?

Looking quickly at other states, in New England, and what their prognostications are for “recession risk/weak outlook” we find:

• Maine — Moody’s lists Maine among the 22 states either in or at high risk of recession. However, Maine’s state economists have pushed back, saying data don’t show a recession currently, though they acknowledge warning signs.

• New Hampshire — Analysts and policy institutes in New Hampshire are sounding alarms. The New Hampshire Fiscal Policy Institute notes that job growth appears to have stalled in 2025, with declines in manufacturing and trade employment contributing to economic headwinds.

• Connecticut — In early 2025, Connecticut’s GDP contracted 0.9 %, which has prompted some observers to suggest the state is already experiencing recession-like conditions.

• Massachusetts and Vermont — Neither Massachusetts or Vermont are widely characterized by economists or policy analysts as currently being in recession or on the brink. The overall New England region is showing very weak employment growth, and many states are under scrutiny.

The overall New England region is showing very weak employment growth, and many states are under scrutiny, according to the Federal Reserve Bank of Boston.

Sliding into 2026

The recession trajectory between now and 2026 will have experts like Lardaro watching if:

• Employment decline continues

• Falling housing permits

• State revenues weakening despite steady prices

If instead Rhode Island holds steady in those three and national rates ease, the state could exit its mild recession by mid-2026.

Lardaro will be blogging about the new labor data during the coming weeks. Additional information and historical data available online: http://www.llardaro.com/current.htm.