URI Economist Issues Warning About RI Economics—Is He Right?

Tuesday, June 20, 2023

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URI economist Len Lautaro had harsh words for state leaders (LR) Senate President Ruggerio, Speaker Shekarchi and Governor McGee.

On one side touting the state’s economic outlook are government officials like Gov. Dan McGee and Assembly leaders Speaker Joe Shegarchi and Senate President Dominic Ruggerio — who are trumpeting the state of the Rhode Island economy.

On the other side is economist Leonard Lardaro.

And Lardaro is targeting Rhode Island politicians.

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A University of Rhode Island economist attacks their claims with data — and says the Rhode Island economy is far weaker than the political narrative suggests.

Lordaro on record

„In other states, the shrinking labor force during the recovery is a concern. Not in RI. Our elected officials are actually benefiting from this — they’re hiding behind the artificially low unemployment rate they’re creating because people think it’s the job gains that cause the low rate,” Lartaro said.

„Rhode Island’s enabler: a secular drop in its labor force participation rate (the percentage of the population in the labor force). That explains how we went from double-digit unemployment rates to values ​​below the national average,” Lardaro said.

„To some extent, it’s driven by the increase in the median age of our population. By how much? Is that the whole story? I tested this economically and found that the decline was still there even after controlling for changes in the median age of the RI population,” Lartaro says.

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URI Professor Leonard Lardaro Photo: URI

Lardaro’s report

Lardaro says:

„April’s Current Conditions Index value of 33 is clearly in the short range. It follows short readings of 42 in both January and March (with a neutral value of 50 in December). I wish I could say that. This month’s reading is a „strong” 33 , but I can’t. Only four

Twelve CCI indicators improved in April, and only two of them improved at a much lower rate than we have seen over the past year. Two „star” indicators, notably retail sales and total manufacturing hours, faltered throughout the pandemic and post-pandemic period. While retail sales did not improve in April (+0.5%), in real (inflation-adjusted) terms, it

Falling for a while. Given its fluctuations of late, it is now unclear whether it is on the upswing. Total productive hours, a proxy for manufacturing output, have now declined over the past five months due to both the length of the workweek and the decline in employment.

Looking at Rhode Island’s broad range of economic indicators over the past year, one sees some areas of strength in the overall data. However, aggregated data can mask very different behaviors during segmentation. Certain sectors of Rhode Island’s economy, associated with higher levels of income, continue to perform well. This is becoming even less true for Rhode Islanders with average and below-median incomes.

If we have a recession here, and the odds are pretty high right now, I’d say, it’s going to be one where overall activity overshadows the remaining areas of strength. Maybe it’s called „recession in a box” or „I can’t believe this isn’t a recovery.” Unfortunately, our current economic performance is completely consistent with the history of our state as FILO [first in, last out].”

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