OMG! Rhode Island’s March data wasn’t just bad, it was god awful, the worst I have seen since the Great Financial Crisis in 2008. Not only did this continue the weakness from the fourth quarter of last year, it amplified it to a level I didn’t think we would see unless we were in a full-blown recession. Things were so weak in March that I have found it necessary to alter what I said last month, that I could no longer rule out the possibility that Rhode Island was in the early stages of a full-blown recession. I would now rephrase this as stating that I would be amazed if Rhode Island is not currently in the early stages of a full-blown recession. FI (First In) is very alive and well here!

 It is possible that March’s data is just a fluke and not representative of where our state’s economy finds itself. Remember the cardinal rule of economy watching: Never place too much weight on an indicator value for a single time period. I would love that. But remember, this is March data, the month prior to the tariff war. Any hopes of  our getting a boost from April’s national economic activity are almost certainly going to be dashed, especially since the trade war is being waged against goods imports, and Rhode Island’s manufacturing sector had already been showing signs of weakness prior to the tariff war, notably a trend of a declining Manufacturing Wage, a rarity to say the least, and declines in both manufacturing employment and the workweek. Remember, this is the most cyclically sensitive part of Rhode Island’s economy.

 I should point out that while there is an official (but nebulous) definition of a recession at the national level, no such determination exists at the state level. In the past, I have used six consecutive months of a contraction-range CCI values. But even that can be problematic. And, historically, recessions often begin well before they are labelled as such, which might well be the case here.

 So, if we are actually in a recession, which is increasingly likely but still not certain, that does not necessarily mean that the levels of key indicators have fallen dramatically. Instead, it will reflect that current levels, even though they might still be “high,” are continuing to fall relative to their values a year (or month) ago. So, it is not the levels of key indicators but their sustainability that is what matters here. Please keep this in mind in the coming months.

 Looking at the March data, we see an exceedingly weak performance. Of the five leading economic indicators contained in the CCI, none improved this month, even though three had relatively easy “comps” from a year ago. The good news? Of the twelve CCI indicators, only two improved relative to a year ago. Retail Sales, a key indicator, which had been the star performer for us over the post-pandemic period, fell in February but managed to eke out a 0.2 percent increase in March. So, its weakness wasn’t just the result of a leap year, as many might have thought. When this indicator weakens, pay a lot of attention!

The other “bright spot” was Private Service Providing Employment, which rose by 0.6 percent relative to a year ago, continuing a string of sub-one-percent growth rates that date back to last June.

Rhode Island’s Labor Force fell in March relative to a year ago, as did both the participation rate and the employment rate. That is so negative that I have resumed publishing the Participation-Adjusted Unemployment Rate, which contrary to the “official” jobless rate of 4.8 percent, was 6.1 percent in March! Of note: Our Employment Rate has now fallen on a yearly basis for every month since last June and resident employment has been flat or declining for three consecutive months.

 As noted earlier, Rhode Island’s manufacturing sector continues to weaken: Total Manufacturing Hours declined on a yearly basis (-3.2%) for the fourth consecutive month while the Manufacturing Wage fell (-1.8%), its sixth consecutive decline. New Claims, which reflects layoffs, increased for its ninth time (monthly) since last March, while Benefit Exhaustions, which reflect long-term unemployment, rose sharply this month (+44.4%), Employment Service Jobs which includes “temps,” and is a leading labor market indicator, fell by 1.3 percent, and Government Employment also fell, but from local government employment, not federal and DOGE. Finally, US Consumer Sentiment dropped sharply (-28.1%), as did Single-Unit Permits, reflective of new home construction (-7.4%).

 Even before the tariff wars, the national economy’s weakness had negatively impacted Rhode Island, as FI (First In) had re-emerged. Sadly, as we begin to confront large state budget deficits, our state’s economic momentum will slow further, either prolonging the Growth Recession or transitioning us to a full-blown recession.   

 

Monthly CCI Values (red = contraction) (Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data. Jan   Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1983 42   58 58 67 75 83 83 75 83 83 83 92 1984 100   92 100 100 100 100 100 92 100 92 92 83 1985 67   75 75 75 67 75 67 50 50 58 83 67 1986 75   83 100 92 92 83 92 92 92 92 92 67 1987 67   67 58 58 67 75 75 75 75 67 75 75 1988 83   83 75 67 67 67 58 50 67 58 50 58 1989 67   50 50 33 58 33 25 25 25 33 33 33 1990 25   25 25 25 17 17 17 17 33 17 25 25 1991 25   17 17 8 25 17 25 25 25 33 17 17 1992 42   42 58 75 75 83 75 67 67 83 83 92 1993 75   83 67 67 83 67 75 75 75 58 42 58 1994 58   67 67 58 58 75 67 67 67 67 83 75 1995 58   58 58 67 50 42 42 42 58 33 67 42 1996 50   42 75 75 67 75 75 67 75 92 83 92 1997 100   92 83 75 67 75 75 75 83 75 92 83 1998 83   75 75 75 75 75 75 67 58 75 75 50 1999 83   75 75 83 67 83 75 75 92 75 83 58 2000 83   83 83 67 42 50 58 50 58 67 67 67 2001 42 33 25 17 33 50 25 33 33 42 33 42 2002 58   75 67 58 42 33 50 50 58 67 67 50 2003 50   50 50 58 58 58 83 67 83 75 92 67 2004 67   67 58 67 58 58 67 67 67 58 50 67 2005 50   67 50 50 42 75 58 67 42 58 58 67 2006 58   58 67 58 33 50 33 58 75 83 58 67 2007 50   50 33 33 58 50 33 33 17 17 8 25 2008 8 8 8 17 8 0 8 0 8 0 8 8 2009 17 8 0 8 17 33 17 42 33 42 50 33 2010 42   58 67 67 75 75 83 83 67 67 75 83 2011 50 67 67 58 50 58 58 42 50 50 58 50 2012 58   50 58/75 50/75 58/67 67/75 50/58 67/75 50/58 75/83 75/83 92 2013 75   67 83 67 83 75 75 67 75 75 67 75 2014 67   67 58 58 67 50 67 67 75 67 58 67 2015 58   58 67 58 67 75 75 92 83 67 75 58 2016 58   67 50 42 50 42 67 75 75 50 58 75 2017 75   83 92 83 83 83 83 83 75 83 92 83 2018 75   92 75 67 92 83 75 67 67 42 83 58 2019 75   33 58 58 58 75 83 67 50 75 58 83 2020 75   75 33 8 8 25 25 25 25 17 25 25 2021 25   17 42 75 92 83 100 75 83 83 83 92 2022 75   75 75 67 67 67 75 92 92 75 67 50 2023 33   58 42 33 33 42 33  50 33 50 58   58 2024 58   75 58 67 75 83 67 75 75 67 67 67 2025 50   33 16                   You can download monthly reports in PDF format starting with January 1999 by clicking on the monthly index value.

Historical Annual CCI Values 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 42 54 33 74 96 67 88 69 65 39 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 22 21 70 69 67 51 72 81 72 77 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 65 39 56 66 63 57 54 40 7 24 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 70 55 74 75 63 64 56 85 79 61 2020 2021 2022 2023              26 65  72  54

Copyright © 2023 Leonard Lardaro, Ph.D. All rights reserved.