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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:

DECEMBER 2014: 67

 

 

 

For a while, hope sprung eternal. It appeared that we might be witnessing the beginning of an ongoing acceleration in the pace of economic during the third quarter. That lasted all the way until we began receiving data from the fourth quarter. It is surprising, and a bit disappointing, how quickly the fourth quarter data extinguished that assessment. Last month, we saw the Current Conditions Index for October fall from its value of 75 during each month of the third quarter to 58. But there was a possible explanation for the decline that was related to the “mystery decline” in payroll employment for October that very likely affected one of the CCI’s indicators. Assuming that to be the case, we could view the October CCI value as 67, not quite as good as third quarter values, but among the highest of the 2014 values nonetheless. Then along comes the November data, where there are no obvious exceptions to take account of. The November CCI value was 67, still good, but once again inconsistent with the acceleration hypothesis. Furthermore, both fourth quarter values convincingly end the short-lived period where we had begun to match or exceed year-earlier CCI values.

 

At this point, it is safe to conclude that in spite of accelerating national economic activity, Rhode Island’s recovery has failed its first test of becoming more broadly based, at least statistically. So,as we move further into the fourth quarter, the lingering question of whether our state’s economic performance is decoupling from the accelerating national economy remains.

 

In November, two of the five leading indicators contained within the Current Conditions Index failed to improve. This is not necessarily as bad as it might sound, for each had very difficult “comps” to beat from last November. Total Manufacturing Hours, which measures strength in our manufacturing sector, fell for the third consecutive month, this time at a greater rate (-2.7%). Last November, however, this indicator had risen at an almost 7 percent rate, an extremely difficult hurdle to exceed. The deterioration in its growth rate has been accelerating since June. Along with this, the Manufacturing Wage declined yet again, for the ninth consecutive time, by difficult to believe 4 percent. Single-Unit Permits, a very volatile indicator that reflects new home construction, declined for the third time in four months, by 23.8 percent. Viewed along with our state’s manufacturing performance in November, the momentum provided by Rhode Island’s goods-producing sector has clearly moderated.

 

Government Employment -0.5
US Consumer Sentiment 18.5 Y
Single-Unit Permits -23.8
Retail Sales 6.6 Y
Employment Services Jobs 1.0 Y
Priv. Serv-Prod Employment 1.4 Y
Total Manufacturing Hours -2.68
Manufacturing Wage -4.0
Labor Force 0.4 Y
Benefit Exhaustions -23.4 Y
New Claims -8.4 Y
Unemployment Rate (change) -2.3 Y
Y = Improved Value

 

Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, rose in November (+1.0%), following the decline last month that ended a string of three consecutive increases. New Claims, a leading labor market indicator, fell by 8.4 percent in November, its eighth improvement in the last nine months, perhaps the brightest spot of this month’s performance. Finally, US Consumer Sentiment rose sharply once again in November (+18.5%), its fourth increase following three consecutive declines.

Retail Sales remained strong in November, increasing by 6.6 percent compared to a year ago. This indicator has now improved for ten of the last twelve months. Private Service-Producing Employment rose by 1.4 percent in November, the first acceleration in its growth rate for the last four months. Not surprisingly, Government Employment failed to improve once again. For November, it declined by 0.5 percent, falling just below 60,000. Benefit Exhaustions, which reflects longer-term unemployment, fell 23.4 percent relative to a year ago. November marked the seventh double-digit improvement for this indicator in the last eight months.

Finally, Rhode Island’s Labor Force rose by 0.4 percent versus a year ago. On a monthly basis, this indicator has declined every month since June. Along with this, our Unemployment Rate fell to 7.1 percent, now the fourth highest nationally.

 

 

THE BOTTOM LINE

“The” question of the fourth quarter is whether the pace of Rhode Island’s recovery will keep pace with the accelerating national economy. Gauging this has not been as easy as one might think, since there have been a few data difficulties and several atypical “comps” along the way. So, while it remains uncertain whether the pace of our recovery will eventually accelerate, it is at least safe to say that Rhode Island’s recovery is continuing, albeit less broadly based than we would like. The improving national economy and declining energy prices can only benefit our state’s recovery, hopefully causing its pace to move more in line with the national economy.

 

  

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 75 75 75 67    

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.
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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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