KINGSTON – “Rhode Island’s year from hell” continued in August, as the state economy slumped back to “nightmare” low matched only by this June, according to University of Rhode Island economist Leonard Lardaro. His Current Conditions Index (CCI) measures the Ocean State’s current economic climate by following 12 state and national economic indicators.

The CCI retreated in August to its lowest possible reading of 0 points, after recovering in July to a “moribund” 8 points, Lardaro said. (READ MORE) Its highest level this year was in April, when the CCI reached 17. (Values higher than the neutral 50 points signify the state’s economy is in expansion; scores below 50 signify contraction.)

The index – based on 12 key economic indicators related to housing, retail sales, the employment situation and the labor supply – attained its maximum value of 100 points several times in 1984 and 1986.

“Prior to 2008, the Current Conditions Index had only registered a value of 8 a few times, and never for more than a single month,” Lardaro wrote in his report. “This year, 8 has become the norm.” Moreover, “what I had viewed as the unthinkable happened this year: [in June], the CCI fell all the way to 0!,” a reading never before seen, although he has calculated the CCI as far back as 1980, Lardaro said.

Still, because the year-over-year comparison would be “to recession values” for each month after July, “I had anticipated that we would not observe a 0 value again,” he said. “Welcome to Rhode Island’s nightmare! For August, the CCI returned to 0 — not one indicator improved.”

The mood of U.S. consumers, as measured by the Reuters/University of Michigan Consumer Sentiment Index, fell 2.4 percent compared with August 2007, while nationwide retail sales fell down 1.4 percent year over year. For each measure, Lardaro said, that was “its ‘best’ decline since April.”

In Rhode Island, the labor force “failed to improve for the ninth consecutive month,” shrinking 0.7 percent compared with August 2007, Lardaro said. And “payroll employment continued its long decline that began in January of 2007, giving us the distinction as worst in the United States for August.”

Private service-producing employment fell 1.9 percent. And employment service jobs, a leading labor market indicator” that includes temporary employment, “registered its seventh consecutive double-digit decline,” falling 15.1 percent compared with August 2007.

Government employment fell 2.8 percent compared with August 2007, “its second consecutive fall of more than 2 percent,” Lardaro wrote, adding that “balancing the budget does have negative economic consequences.”

And “Rhode Island’s goods-producing sector remained in a tailspin, as both housing and manufacturing weakened further,” Lardaro wrote. Statewide, only 66 new permits for single-family housing were issued in August, a year-over-year decline of 43.3 percent. Total manufacturing hours fell 8.4 percent compared with a year ago, “as both employment and the length of the workweek dropped,” he added. “The ‘good news’ for our manufacturing sector was that the manufacturing wage fell by only 0.2 percent, although it still remains below $14 per hour.”

Meanwhile, the state’s unemployment rate “jumped all the way to 8.5 percent in August, from 5.1 percent a year ago,” an increase of 66.7 percent, he said. Benefits exhaustions, a measure of long-term joblessness, were up 44.5 percent compared with August 2007. New weekly claims for unemployment benefits rose 30.7 percent year over year.

“Remember,” Lardaro added, “this compares indicators to their value last August, which for Rhode Island, was a recession month.”

Going forward, he wrote, “stating that weakness across the board will continue may well be an understatement, since both the national and global economies weakened significantly in September and have deteriorated further in October.” Yet he stressed that, although “those forces did intensify our existing weakness,” the national and global economic difficulties are not the source of “all of Rhode Island’s economic woes.”

The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate. Additional information, including historical data back through 1980, is available at members.cox.net/lardaro/current.