Rhode Island is in a recession … and likely has been since last December, according to University of Rhode Island economist Leonard Lardaro.
“The time for equivocation has come to an end,” Lardaro wrote, commenting on his monthly Current Conditions Index. “RHODE ISLAND IS IN A RECESSION.”
His view may not be shared regionally and nationally, but the Federal Reserve Bank in Boston and the Federal Reserve nationally have characterized the regional and national economy as lackluster.
Lardaro has been publishing his Index for 30 years. It is a measure of the state’s economic health, tracking a dozen key areas. A rating of 50 means the economy is neutral, higher it is expanding, and lower it is contracting. For the first eight months of this year, it hit 50 only three times, with a low of 16 in March.
In each month this year, from January through August, the index has fallen well below the previous year’s level.
Here’s a look at the comparison, with 2024 first and 2025 second: January, 58/50; February, 67/33; March, 58/16; April, 67/50; June, 75/33; July, 58/50; and August, 67/33
Only four of Lardaro’s 12 measures showed positive growth in August, with eight in negative territory. “While some indicators have shown favorable values at times, and that is also true this month, as a group, this has not been the case.”
The four areas showing positive growth, year over year were retail sales, up 4.5 percent; total manufacturing hours, up 2.6 percent; manufacturing wages up 1.7 percent; and private service-producing employment, up slightly, 0.6 percent.
And, year over year, falling in negative territory were, government employment, down 0.9 percent; U.S. consumer sentiment, down 14.6 percent; single-unit permits for new home construction, down 9.1 percent; employment service jobs, 0 percent change; labor force, down 0.4 percent; benefit exhaustions, which is related to longer-term unemployment, up 30.7 percent; new claims, which are related to layoffs, up 8.8 percent; unemployment rate, up 0.1 percent.
While Lardaro recognized some positive elements, he said recession is about sustainability and projected a slowing national economy.
“You might think, how can we be in a recession when several statistics are still favorable? Because the existence of a recession is not about levels, but their sustainability.” Lardaro said.
“It has always been difficult to convince people that we are in the early stages of a recession because of this perception,” Lardaro said. “Recession means that current levels will not be sustainable in the coming months, as weakness continues to catch up to and overtake strength in economic numbers. That is exactly what has been happening in Rhode Island since last December.”
He also said that national trends will have a “major say in determining the future direction of our economy. Clearly, national growth will be slowing this year, and depending on how the tariff war plays out, it could be even more negative than it has been up to this point.”