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:
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.
The magic number is now up to five - for five consecutive months, the Current Conditions Index has either matched or exceeded its year-earlier value. July was yet another very good month for Rhode Island, as its overall economic performance continued to improve and its labor market appears to be sustaining the kind of momentum we haven’t seen for a while now. The CCI for July was 75, tied for its highest value this year, as nine of the twelve CCI indicators improved. Clearly, Rhode Island’s rate of growth is continuing to accelerate above last year’s tepid 1.2 percent rate as the present recovery becomes more broadly based.
As of the beginning of 2015, Rhode Island’s labor market had at long last begun a meaningful recovery from the Great Recession, as both the labor force participation rate and the employment rate began to rise simultaneously. This indicates that we are finally witnessing a period where Rhode Island’s Unemployment Rate is declining in the way we want it to, and not as the statistical byproduct of unemployed persons dropping out of the Labor Force. For Rhode Island, as strange as this might sound, that’s a big deal.
Let’s not overstate all of this, however. Rhode Island has still recovered less than three-fourths of the jobs it lost during the last recession. At least we can say that the pace at which these lost jobs are being recovered appears to now be accelerating. Better late to “the party,” I guess, than never getting there at all. This is true to form for Rhode Island’s historical performance - among the first into recession and among the last states to truly recover.
Rhode Island’s July economic performance was quite good. Nine indicators improved overall. While only three of the five leading indicators contained in the Current Conditions Index improved, the two that failed to improve both had very difficult comps to beat from last July. New home construction, in terms of Single-Unit Permits, fell very sharply this month (-19.4%) compared to last July, after an apparently (at the time) encouraging jump last month. But last July, Single-Unit Permits had surged by over 26 percent, so it is not entirely surprising that this indicator failed to improve this month. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in July (-1.4%), its fourth consecutive decline, but it too had a very difficult comp to beat from last July (+3.9%). All of the remaining leading indicators contained within the CCI improved in July. US Consumer Sentiment rose at a double-digit rate (+13.2%) for the tenth consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved at a double-digit rate (+10.2%), its most rapid rate since January of 2013. This was its fifth consecutive improvement. Finally, New Claims, a leading labor market indicator that reflects layoffs, fell by 7.8 percent in July, sustaining its well-defined downtrend.
Retail Sales turned in another strong performance in July (+6.9%), following close to double-digit increases in April and May. This indicator has now improved for fifteen consecutive months. Private Service-Producing Employment increased by 2.1 percent in July, its most rapid growth in over a year. Its rate of improvement has now accelerated for the past three months. Government Employment actually rose slightly in July (+0.3%), its first increase since last June. Benefit Exhaustions, which reflects longer-term unemployment, fell by 26.4 percent relative to last year. For those into fiction, Rhode Island’s Manufacturing Wage declined for the seventeenth consecutive time in July (-1.9%). Rhode Island’s Labor Force sustained the end of its two-year string of year-over-year declines, rising by a hefty (for us) 1.0 percent in July. And, for only the third time in a very long time, Rhode Island’s Unemployment Rate declined, this month to 5.8 percent, accompanied by large jumps in both resident and payroll employment, along with a substantial decline in the number unemployed.
You can download monthly reports
in PDF format starting
Historical Annual CCI Values
Copyright © 2014 Leonard Lardaro, Ph.D. All rights reserved.