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BACKGROUND

The Current Conditions Index (CCI) is a monthly indicator that details the present state of the Rhode Island economy by following the behavior of twelve key economic indicators pertaining to housing, retail sales, fiscal pressures, the employment situation, and labor supply:

  • Government Employment
  • Employment Services Jobs*
  • Retail Sales
  • University of Michigan US Consumer Sentiment Index**
  • Single-Unit Housing Permits
  • Private Service-Producing Employment***
  • Manufacturing Man-hours****
  • Average Hourly Manufacturing Wage
  • Seasonally Adjusted Unemployment Rate
  • Resident Labor Force
  • New Initial Claims for Unemployment Insurance
  • Unemployment Insurance Regular Benefit Exhaustions

The CCI ranges from 0, when no indicators improve compared to year-earlier levels, to 100, when all twelve show improvement. Values above 50, the "neutral" value, indicate that the Rhode Island economy is expanding, while values below 50 are indicative of contraction. Prior to "The Great Recession" that began in June of 2007, the CCI had never attained a value of 0, indicating that no indicators improved relative to year-earlier values. This changed in 2008, when the CCI fell to 0 on three occasions, and in 2009, when another value of 0 was recorded. Prior to this, the low for the CCI had been 8, which occurred for only a single month on several occasions. For almost all of 2008, the CCI recorded values of 8. The CCI attained its maximum value of 100 on several occasions, for almost all of 1984 and once in 1986. Note that these values occurred exclusively when Rhode Island was still a manufacturing-based economy.

*
Up until February 2006, the CCI used Help Wanted Advertising for Providence, RI as one of its indicators (and toward the end of its use an econometric adjustment was required). This indicator replaces Help Wanted Advertising.
** Prior to the October 2001 report, the CCI used Existing Home Sales in Rhode Island. This indicator replaces Existing Home Sales. 
*** Prior to the January 2003 report, Miscellaneous Service Employment, a major category of the SIC codes, was used. Now that NAICS replaces the SIC codes, the current indicator was chosen to replace Miscellaneous Service Employment.
****Beginning with the November 2005 report, Manufacturing Man-hours will be referred to as Total Manufacturing Hours.

 


THE CCI THIS MONTH
MONTHLY HIGHLIGHTS:

JUNE 2014:50

 

 

Just when it appeared that Rhode Island's economy was beginning to re-accelerate, bringing back memories of late 2012, along comes June's data that abruptly shatters that notion and then some. The June Current Conditions Index value fell all the way back to its neutral value of 50, as only six of the twelve CCI indicators improved. Worse yet, April's value that had been 58 has been revised down to 50 as well. Not exactly life in the fast lane!

 

To say that Rhode Island's overall performance in 2014 has been somewhat disappointing has now become an understatement. Not only did we never get the post-winter bounce we were hoping for, even the good-weather months are proving to be very disappointing. What I find perplexing about Rhode Island's most recent performance is that in spite of an improving national economy, we continue to flounder.

 

Perhaps the most pressing issue now is whether Rhode Island has begun to decouple from the accelerating national economy. Apparently, Rhode Island's negatives are finally catching up to its positives, increasingly diminishing overall momentum. This is part of the reason why Rhode Island has been unable to reduce its Unemployment Rate to a level that would end its prolonged stretch as the state with the highest jobless rate. Think about this for a moment - not only does Rhode Island lag in terms of its relative performance, if recent trends continue, it will begin to lag in terms of its absolute performance as well. I now characterize Rhode Island's performance as moving from precarious to tenuous, with June marking the eleventh consecutive month where the CCI has failed to beat its year-earlier value.

 

For June, only two of the five leading indicators contained within the Current Conditions Index improved, although both did so at healthy rates. Single-Unit Permits, which reflect new home construction, turned in yet another strong performance in June, rising by 23.7 percent relative to last June. Total Manufacturing Hours, which measures strength in our manufacturing sector, rose sharply again in June (+4.3%), as both the length of the workweek rose and manufacturing employment increased. Oddly, in spite of this continuing manufacturing momentum, the Manufacturing Wage actually declined for a fourth consecutive time in June, by 2.3 percent.

 

Government Employment -0.3
US Consumer Sentiment -1.6
Single-Unit Permits 23.7 Y
Retail Sales 3.4 Y
Employment Services Jobs -4.1
Priv. Serv-Prod Employment 1.2 Y
Total Manufacturing Hours 4.30 Y
Manufacturing Wage -2.3
Labor Force 0.5 Y
Benefit Exhaustions 10.0
New Claims 21.8
Unemployment Rate (change) -1.6 Y
Y = Improved Value


US Consumer Sentiment
fell for the second consecutive month (-1.6%) following a string of five consecutive increases. Employment Service Jobs, which includes temporary employment, and is a prerequisite to employment growth, declined sharply in June, by 4.1 percent, its seventh consecutive decline. I continue to view changes in this indicator somewhat suspiciously. The biggest surprises for June, which contributed a great deal to the CCI's neutral value of 50, were increases in both New Claims for Unemployment Insurance, the timeliest measure of layoffs, and Benefit Exhaustions, which reflects longer-term unemployment. Of these, New Claims, which is a leading indicator, rose at an alarming rate, 21.8 percent relative to last June. It is not clear whether the recent improvements in this indicator will prove to be sustainable. Benefit Exhaustions increased by 10 percent relative to a year ago, following two consecutive months of double-digit improvement.

 

Retail Sales was one of the few bright spots for June, rising by 3.4 percent compared to a year ago. This indicator has now improved for six of the last eight months. Private Service-Producing Employment rose by 1.2 percent in June, slightly slower than its May growth. Government Employment fell once again, declining by 0.3 percent versus last June. Finally, Rhode Island's Labor Force actually rose again June, while our Unemployment Rate fell to 7.9, but remained #1.

 

 

THE BOTTOM LINE

If Rhode Island's economic momentum is hanging on by a finger nail, apparently that finger nail is its goods-producing sector. Who would have ever though that our state's goods-producing sector (housing and manufacturing) would be carrying us at a point in time when we have been a post-manufacturing economy for so long (since late 1987)? While I am hoping that the recent 50 values prove to be aberrations, the best indication of our future direction will be determined by our ability to exceed year-earlier CCI values. Since our elected officials have done virtually nothing to reinvent our state's economy, all we can do for now is keep our fingers crossed.

 

  

Monthly CCI Values (red = recession)
(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 75   58 58 58 67 50            

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.
getacro.gif (776 bytes)

 

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            
70 55 74 76            

 

Annual CCI Values

Copyright © 2008,2009, 2010Leonard Lardaro, Ph.D. All rights reserved.

 

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