LARDARO

The Current Conditions Index, a measure of the strength of Rhode Island’s economy, showed a severe contraction in March for the third month in a row.

“The year 2008 continues to be a nightmare for Rhode Island’s economy,” said Leonard Lardaro, the University of Rhode Island professor who created the index.

The index measures the behavior of 12 indicators: government employment; U.S. consumer sentiment; single-unit permits; retail sales; employment service jobs; private service-producing employment; total manufacturing hours; manufacturing wages; labor force; benefit exhaustions; unemployment rate; and new unemployment claims.

The data from the 12 indicators is used to compile an index. When the value of the index is above 50, the economy is expanding. When it is below 50, it is contracting.

For January, February and March, the value was 8. By comparison, the value was also 8 in April 1991, when a recession, a banking crisis and a major defense cutback all took their toll on the Rhode Island economy, Lardaro said. The index attained its maximum value of 100 on several occasions during 1984 and 1986.

In the March, 2008 index, only one of the 12 indicators, manufacturing wages, improved by 3 percent over March 2007, reflecting some combination of skill shortages and a contraction of low-end manufacturing jobs, Lardaro said.

“In March, our labor market clearly became unhinged,” he said.

He cited the rise in the unemployment rate to 6.1 percent and the loss of 10,100 jobs during the last year.

In a statement with the index, Lardaro said, “Anyone who denies that Rhode Island is in a recession is clearly delusional. More importantly, based on our state’s 2008 economic performance, we have entered a second and deeper recession phase, where prior economic activity levels will continue to become ever-more unattainable. Having to eliminate large [state] budget deficits amid all this weakness will prove to be far more difficult than almost anyone here has imagined.”