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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:

OCTOBER 2017: 83

 

 

 

Rhode Island began the fourth quarter with what appears to be good news about its economic performance: The Current Conditions Index rose from its September value of 75 back to 83, the value it has remained at for most of 2017. In a sense this is a “win,” in that we improved from last month’s CCI value, which failed to exceed its year-earlier value for the first time this year, to once again moving beyond last year’s value in October. But as wins go, this was not terribly pretty. I won’t go as far as saying this was an ugly win, but it was disappointing, nonetheless.

 

Looking at both national and Rhode Island trends, there are several developments that I am becoming increasingly worried about. At the national level, the yield curve, the difference between longer and shorter-term interest rates has flattened noticeably of late. Historically, this signals that a slowing in the rate of national growth will occur in the future. Its predictive record is excellent. The fact that so many in the financial media are convinced that “this time is different,” further heightens my concern, as their consensus almost always proves to be wrong. Why does this concern me? Because, as the result of Rhode Island’s elected officials doing so little to meaningfully reinvent our state’s economy over the years, we remain FILO - first in, last out of national weakness. Historically, Rhode Island falters a year or longer before the national economy does. So, we might be seeing the beginning of weakness here. Based on what? First, payroll employment here has now declined on a monthly basis for three consecutive months. Second, income-related tax receipts have begun to disappoint. Third, welfare-related caseloads have begun to rise. That three-part combination is a “text book” pattern for slowing economic activity. As I noted last month, it is quite possible that recent payroll employment declines are spurious. We won’t know that until the labor market data revisions are released in February. Remember our state’s motto!

 

Government Employment 0.0
US Consumer Sentiment 15.1 Y
Single-Unit Permits 28.6 Y
Retail Sales 6.0 Y
Employment Services Jobs 0.1 Y
Priv. Serv-Prod Employment 0.4 Y
Total Manufacturing Hours 5.2 Y
Manufacturing Wage 5.6 Y
Labor Force 0.5 Y
Benefit Exhaustions -3.2 Y
New Claims 3.1
Unemployment Rate (change) -0.9 Y
Y = Improved Value

 

At the risk of sounding like a commercial, “Wait, there’s more.” Employment Service Jobs, an indicator that includes temporary employment and is a leading indicator of future employment, barely improved in October (+0.1%), for only the second time since March of 2016. It remains in a downtrend, which bodes badly for future job gains. New Claims, the timeliest measure of layoffs, rose again in October by 3.1 percent, even with an easy comp from a year ago. It has now risen for two consecutive months, threatening its downtrend. Ending a string of eight improvements in the prior ten months. This combination - less employment and higher layoffs might be where we are heading! Finally, our state’s employment rate, the percentage of the working-age population that is employed, has now fallen for the past three months, hardly a healthy sign. Worse yet, Rhode Island’s labor force participation rate, the percentage of working age Rhode Islanders who are in our labor force, decreased again in October, as it has been doing of late. These trends cast doubt on the validity of our unchanged October Unemployment Rate.

 

In assessing the October CCI performance, four of the five leading indicators contained in the CCI improved, and all had relatively easy “comps” a year ago. As stated earlier, Employment Service Jobs barely improved. Fortunately, both goods-producing leading indicators contained in the CCI improved again.  Single-Unit Permits, which reflects new home construction, rose at a double-digit rate, 28.6 percent, thanks in part to an easy comp last October. Total Manufacturing Hours, a proxy for manufacturing output, the other goods-producing indicator, rose by 5.2 percent (also a very easy comp). Finally, US Consumer Sentiment improved in October (+15.1), its twelfth consecutive increase. Sustaining momentum in our state’s goods-producing sector appears to be the primary bright spot in this month’s data.

 

Government Employment was unchanged from a year ago, although its level remained above 60,000. Private Service-Producing Employment growth remained sluggish again in October (+0.4), continuing its recent deceleration. Retail Sales rose by a healthy 6 percent, its third consecutive increase after either being flat or falling in recent months. Benefit Exhaustions, which reflects longer-term unemployment, fell by 3.2 percent in October, its weakest improvement since June. Finally, our Labor Force trend, Rhode Island’s train wreck, barely managed to improve in October, now eight in a row.

 

 

 

  

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 92 83 83 83 83 83 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 75 63 64 56      

 

Historical CCI Values

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

 

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