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Lardaro spoke with reporter Alex Nunes about the current economic situation and what’s potentially to come.



NUNES: We spoke about six weeks ago or so, and at the time, you told me you thought that Rhode Island had already been heading into a recession and that coronavirus would just send us into it sooner. What do you think now?

LARDARO: Same thing. There’s no doubt whatsoever in my mind, and I haven’t changed my opinion from six weeks ago, Rhode Island is in a very serious recession, but then so to is the U.S., so to is the global economy. And my biggest wish is, coming out of this, that our elected officials will be a lot more straightforward about how our economy is doing, because we were not doing well. Our growth was among the lowest in the country. We were largely flat since 2015. The old saying “a crisis is a terrible thing to waste,” well, we wasted the 2008 crisis. I don’t think we’ll be able to get away with wasting this, because the economy in a post-manufacturing economy is much less forgivable. So we’re going to have to change things, and that’s actually a positive.

NUNES: How do you do that kind of drastic change at a time when the economy is so diminished?

LARDARO: Well, that’s when you do it, because you have time. You don’t have to run all these different things going on. What you’re looking at is: we have to plan our way out of this, and so why not plan a more capable way of running the state? We haven’t been doing a very good job, and I really think that it’s a knowledge-based economy. We need a much more knowledge-based approach to economic planning.

NUNES: I think the governor would say that she has invested and tried to push more into a knowledge economy and manufacturing. Are you saying it’s not been enough?

LARDARO: Yes, I’m definitely saying it’s not enough.

NUNES: So, we’re getting into this recession sooner. Is it also becoming worse than it would have been?

LARDARO: Our resiliency, I think, is open to question, because we were slowing down. There’s a lot of unevenness. And one of the things we’re going to see from this pandemic globally is how inequality is really being adversely affected, and we had a fair amount of that with a lot of Rhode Islanders left behind in the last recovery. So, you can hide behind an unemployment rate that was artificially low, and it was only artificially low because so many Rhode Islanders had really dropped out of the labor force. And those raise the questions: What are our engines of growth? You know, doing a few programs here or there for manufacturing or literacy—it’s not enough. We need an internally-generating engine like a successful state up north, Massachusetts, that really can feed on itself and build farther and farther along, and really get us going.

NUNES: What specifically do you think Rhode Island should do, like specifics?

LARDARO: We need to have a knowledge-based approach to development. So, we need in-house due-diligence, where we have a group of economics PhDs, with extensive economic impact analysis, the right software to work with that, and start looking at things and guiding policy, or evaluating when policies come in. We also need to really look at ourselves critically, much more honestly than I think we’ve been willing to do in decades now. What are our strengths? And that’s easy. But, what are our weaknesses? And I don’t think our state government has been forthcoming enough for that. 

NUNES: Tourism is a huge part of the Rhode Island economy. Summer is approaching. What are you expecting in terms of the experiences of hotels, restaurants, seasonal shops, these places that really rely on seasonal business?

LARDARO: The thing with Rhode Island is that tourism has been very successful, and I salute them. But the problem with Rhode Island—this goes back a long time—it’s too successful. It’s far too important as a percentage of our state’s economy. Add to that another revenue source, gambling. When you have disproportionately large sources like that and things hit them adversely, it really hurts your economy. So, going into this, even forgetting the gambling part, what are the industries being most adversely affected? Tourism, hospitality, travel, all of that. And we rely a great deal. And so coming out of this, I don’t think people are going to go back to getting into very crowded situations and large public places. I think there will certainly be a lot more than there is now. But it’s not going to be the way it was, maybe for one, two, or three years. So tourism is really going to have some real problems.

NUNES: What are some points of optimism right now?

LARDARO: It’s a beautiful state. We have a really good population of people who are really entrepreneurial. There are a lot of things going for us that we can build on.

NUNES: Len Lardaro, professor of economics at the University of Rhode Island, thanks very much for speaking with me.

LARDARO: Thank you very much for having me.

Alex Nunes can be reached at anunes@thepublicsradio.org.