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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:

FEBRUARY 2017: 83

 

 

The first quarter of 2016 wasn’t exactly stellar. And, while we had been led to believe that the second half of last year was a period of economic acceleration, as it turned out, data revisions eliminated most of the strength that we thought had occurred. The good news, though, is that Rhode Island has begun 2017 on a highly positive note, reminiscent of the momentum we previously thought we experienced at the end of last year. Better late than never, I guess!

 

The Current Conditions Index for February was 83, higher than any value in 2016 (although we previously thought we attained this), as ten of the twelve CCI indicators improved. Better yet, the CCI has now exceeded its year-earlier value for the most recent three months and four of the last six months. Momentum is definitely accelerating, perhaps back to where we thought it was at the end of last year. Of the five leading indicators contained in the CCI, four improved, although three of those had fairly easy comps a year ago.

 

The sole leading indicator that failed to improve, Employment Service Jobs, includes temporary employment and is a leading indicator of future employment. It was the greatest disappointment among all revised indicators, and it clearly continues to disappoint.   The last time this indicator improved was March of 2016. This indicator should be monitored, since its continuing deterioration suggests a weakening in future employment growth.

 

Government Employment 0.3 Y
US Consumer Sentiment 5.1 Y
Single-Unit Permits 22.9 Y
Retail Sales 2.5 Y
Employment Services Jobs -3.2
Priv. Serv-Prod Employment 1.0 Y
Total Manufacturing Hours 0.9 Y
Manufacturing Wage 5.5 Y
Labor Force 0.0
Benefit Exhaustions -17.8 Y
New Claims -30.2 Y
Unemployment Rate (change) -0.9 Y
Y = Improved Value

 

 For the third consecutive month, both indicators reflecting Rhode Island’s goods-producing sector improved. Total Manufacturing Hours, a proxy for manufacturing output, rose by 0.9 percent, a deceleration in growth from the prior two months. February’s improvement in this indicator emerges partially from a relatively easy comp last February. The main driver of its improvement was a longer workweek. Combine this with the failure of Employment Service Jobs to improve and one sees a possible trend where businesses may begin substituting additional hours in place of increasing employment.  Single-Unit Permits also rose sharply this month (+22.9%), in spite of a very difficult comp last February. February was the third consecutive improvement in this indicator. If mortgage rates continue to rise and the restricted supply of houses on the market causes higher home prices to persist, future strength in this indicator may not materialize.

 

US Consumer Sentiment improved in February (+5.1%), its fourth consecutive increase, something very likely tied to economic optimism that has been associated with the outcome of the presidential election. New Claims, the timeliest measure of layoffs, fell dramatically in February (-30.2%), its sixth improvement in the last seven months. It had a fairly easy comp from last year.

 

Government Employment continues to remain above 60,000, which it has now done for over a year. Sustaining this level, which had largely been the result of rising federal government employment, was driven by higher state and local government employment in February. Private Service-Producing Employment growth has been somewhat volatile of late. For both of the most recent two months, it has risen by 1 percent, which is close to its highest rate of growth since last July. Retail Sales did well in February, rising by 2.5 percent compared to a year ago. After rising sharply last month, Benefit Exhaustions showed a noticeably improvement in February (-17.8%), resuming its longer-term downtrend.

 

The year-over-year performance of Rhode Island’s Labor Force, which I continue to view as a train wreck, not only failed to improve during all of 2016, it has yet to improve this year. At least the year-over-year change for February was 0. Improvement hasn’t occurred since April of 2014! At least the February Unemployment Rate decline, for once, occurred for the right reasons. Pay no attention to its move below the US rate.

 

 

THE BOTTOM LINE

As national economic momentum is accelerating, so too is that for Rhode Island. There are limits to US growth, though, given that we are close to full employment and monetary tightening will continue. That’s not terribly good news for Rhode Island, given our confirmed status as the proverbial canary in the coal mine. While our elected officials obsess over our jobless rate falling below the US rate, they refuse to acknowledge the primary reason for how it got there — a Labor Force whose level continues to fall off a cliff. We remain unprepared for slowing US growth. This would be a good time for them to go into crisis mode. The problem is, they don’t know how.

 

  

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 67   67 58 58 67 50 67 67 75 67 58 67
2015 58   58 67 58 67 75 75 92 83 67 75 58
2016 58   67 50 42 50 42 67 75 75 50 58 75
2017 75   83                    

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 2014 2015 2016      
70 55 74 76 64          

 

Copyright © 2014 Leonard Lardaro, Ph.D. All rights reserved.

 

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