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.
As the fourth quarter and 2013 came to an end, Rhode Island’s economic performance continued as it had for a while - we are moving forward, albeit at a not very encouraging speed. The news overall continued to be mixed: the good news was that the Current Conditions Index for December rose slightly to 75 from its November value of 67. And, within December’s performance, there were some positive results, mainly that almost all of the CCI’s leading economic indicators improved. That bodes well as we move into 2014. The bad news pertains to the continuation of a disturbing pattern: for a fifth consecutive month, and the sixth time in seven months, the CCI failed to exceed its year-earlier value. Hopefully, since the CCI values in early 2013 were not as strong as they had been in late 2012, we will soon find ourselves exceeding year-earlier values again in the first part of 2014. That is a very real possibility if the US economy continues to strengthen. We’ll just have to keep our fingers crossed. Once we begin to exceed prior-year values this will be the signal that the recovery is once again becoming more broadly based and that our momentum is accelerating. As I noted last month, the ultimate test of how robust Rhode Island’s recovery proves to be will be defined by our ability to accelerate from current and past rates of growth. We can only hope that our state’s continuing failure to meaningfully redefine itself for the information age (other than renaming the EDC) won’t pose too many obstacles.
For December, four of the CCI’s five leading indicators improved. The other, Single-Unit Permits, barely failed to improve, declining 1.4 percent from a year ago. While this was only its third non-improvement in over a year, this month’s result may well be more of a reflection of December’s weather than of any underlying economic weakness in our state’s housing sector.
US Consumer Sentiment rose sharply (+12.9%) in December following three consecutive months of declines. It has remained in an uptrend that we can expect to continue as long as the stock market continues to improve. Employment Service Jobs, which includes temporary employment, a prerequisite to overall employment growth, rose by 2.0 percent in December following a decline last month. While it remains in an uptrend, it appears quite likely that its values are levelling off around 9,000, assuming that rebenchmarking next month doesn’t change this pattern. Should layoffs begin to rise, this will pose a number of problems to our economic momentum as we move into 2014.
All of the remaining leading indicators improved in December. New Claims for Unemployment Insurance, the timeliest measure of layoffs, improved significantly in December, falling by 21.8 percent, its second consecutive double-digit decline. While this indicator is not yet in a well-defined downtrend, the most recent four months indicate that this may be changing. The final leading indicator, Total Manufacturing Hours, which measures strength in our manufacturing sector, rose by a very healthy 3.5 percent in December, driven mainly by a large increase in the length of the workweek. This indicator has now improved for eleven of the last thirteen months. Combined with the recent behavior of Single-Unit Permits, it is clear that Rhode Island’s goods-producing sector is far from dead.
Retail Sales have remained strong on a year-over-year basis, in spite of a slowing in their rate of growth of late. On a monthly basis, however, Retail Sales have generally been declining since September. Private Service-Producing Employment growth, which had recently moved above a one percent rate of growth, slipped below that rate in December, rising by only 0.8 percent. When the rebenchmarked data are released next month, we will likely see notable revisions in this indicator. Our state’s Labor Force declined yet again (for the ninth consecutive time). Yet in spite of this, Rhode Island managed to move into sole possession of the #1 slot, not for a noteworthy positive area, but for our Unemployment Rate. Rhode Island’s jobless rate rose slightly over the month while other states saw declining rates. Finally, Government Employment edged down again (by 0.3%).
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Historical Annual CCI Values
Copyright © 2008,2009, 2010Leonard Lardaro, Ph.D. All rights reserved.