The Rhode Island economy has slipped into recession twice over the past 20 years, most recently when the dot.com bubble burst in 2001. Back then, the housing market was soaring, and within a year the state labor market had recovered.

The other recession hit New England in 1989, with the collapse of the commercial real estate markets, and dragged down just about ever sector. It lasted for three years. Rhode Island lost roughly 40,000 jobs. The unemployment rate climbed to almost 9 percent. And the ranks of the unemployed swelled to 47,000 — 13,600 more than were on the state unemployment rolls as of last month.

Now, the economic data suggest that Rhode Island is in another recession, and one economic forecasting firm predicts this one will last through 2009. “Right now, it looks like the recession will probably be almost as long as 1989-91 recession,” said Andres Carbacho-Burgos, an economist for Moody’s Economy.com. “So, it’s going to be bad.”

The National Bureau of Economic Research defines a recession as a “significant decline in economic activity” across various sectors of the economy which lasts more than a few months. There is no state definition of a recession, per say, but the measurements economists use are generally the same.

In Rhode Island, the current recession has already cost the state close to 8,000 payroll jobs during the last 12 months — nearly twice as many jobs as were lost during the 2001 recession, state Labor Department data show. (The jobs numbers are adjusted to account for seasonal fluctuations.)

Rhode Island is one of only two states, the other being Michigan, in which payrolls were down from January of last year, according to the U.S. Bureau of Labor Statistics.

The median price of a single-family house during the last 14 months has declined roughly 6 percent, according to Global Insight, a research firm in Waltham, Mass. By contrast, when the tech-bubble burst in 2001, the median single-family house price in Rhode Island shot up 14.7 percent, according to the Rhode Island Association of Realtors. And prices continued to climb for the next four years.

The current house-price declines are shaping up to look more like the 1990s, when single-family house prices in the state fell more than 10 percent from 1990 through 1993. Prices did not begin to rise again until 1996.

Global Insight forecasts that Rhode Island’s house prices — already down about 6 percent from their 2006 peak — will fall another 7 percent before they hit bottom in the first quarter of next year.

The current recession is different from the last two, mainly because it is driven by house-price declines coupled with historically lax mortgage lending that allowed millions of homebuyers to take out mortgages they couldn’t afford. The concentrations of “subprime” loans, made to borrowers with blemished credit, has been especially high in Rhode Island, where the median income has lagged the national average, and house prices run higher than in the South or Midwest.

Rhode Island’s median household income as of December was $58,000. An “affordable” mortgage is generally considered one in which the monthly payment represents 25 percent to 30 percent of the borrower’s annual income. By that measure, a household at the median income could only afford a mortgage that cost $14,500 to $17,400 a year, or $1,200 to $1,450 per month.

“Generally, someone at the median household income in Rhode Island is barely able to qualify for a mortgage,” said Economy.com’s Carbacho-Burgos.

The lack of affordability helps explain why the state has had among the highest concentrations in the country of subprime mortgages –– and now more delinquencies –– than most other Northeast states.

Rhode Island’s mortgage delinquency rate at the end of last year was 5.6 percent, the highest of any state in New England, according to the Mortgage Bankers Association. A mortgage is delinquent if it is at least 30 days or more past due. The delinquency rate includes mortgages in foreclosure. That rate is expected to continue to rise until the third quarter of this year, according to a forecasting firm, CreditForecast.com.

Meanwhile, “real” wages (not including investment income) have remained flat, and Moody’s Economy.com forecasts they will decline slightly.

During the 1989-91 recession, real wages in the state declined about 5 percent, according to Economy.com. Back then, the recession in Rhode Island was exacerbated by a state banking crisis and the downsizing of military bases that pushed up the unemployment rate by mid-1992 to nearly 9 percent.

Economy.com is forecasting that the state’s unemployment rate during the current recession will peak in mid-2009 at a little over 6 percent.

A local index of the Rhode Island economy that has accurately recorded the last two recessions sank in January to its lowest level since April 1991. The monthly Current Conditions Index showed 11 out of 12 indicators had deteriorated in January, with the overall index falling to 8. Anything below the neutral value of 50 signals a decline.

“I think the earliest you’d be looking at a recovery in Rhode Island is toward the fourth quarter in 2008,” said the index’s manager, Leonard Lardaro, an economics professor at the University of Rhode Island, “and maybe not until after then.”

Edward M. Mazze, a distinguished university professor of business administration at URI, predicts that this recession is going to be “very short” for the country, but “probably a little longer for Rhode Island.”

Mazze, the Rhode Island forecaster for the nonprofit New England Economic Project, said he expects that “by early 2009 some of the major indicators” in the state will improve.

More worrisome for the state, he said, is the slowing pace of economic growth that he has tracked over the past 10 years.

For example, the state Gross Domestic Product, which measures all goods and services produced, recorded an annual growth rate from 1996 to 2001 of 3.6 percent. From 2001 to 2006, the state GDP growth rate slowed to 2.5 percent. And the 2006 to 2011 forecast is for a growth of 1.6 percent.

Rhode Island is facing a $384-million budget deficit for the fiscal year that begins July 1. Oil and food prices continue to rise. And consumers are not spending as much.

Mazze is among those who feel encouraged that the federal government’s aggressive stimulus package, which includes $168-billion in tax relief, will help revive consumer spending and jolt the economy.

Of course, that depends on whether consumers decide to spend their tax refunds shopping at the mall — or paying off debts.

larditi@projo.com