Rhode Island Current Conditions Index

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 2013: 67

Just as persons in Rhode Island finally discovered that our state’s economy performed considerably better than the flawed labor market data had led us to believe throughout 2012, we wake up to the reality that the first two months of 2013 have not been as kind to our state’s economy. During the second half of 2012, Rhode Island’s recovery clearly strengthened, as the breadth of overall economic activity here (the number of indicators improving) and the pace of this recovery accelerated. We attained Current Conditions Index values of 92 twice in late 2012 and finished the year with a pair of 83 values, as ten of the twelve CCI indicators improved. For January of 2013, the CCI fell to 75, and in February, the third anniversary of Rhode Island’s recovery, the CCI fell to 67, as only eight CCI indicators improved. Happy Anniversary! At least it is still possible to say that while the CCI values for each of the first two months this year were somewhat discouraging relative to what we saw in the second half of 2012, both did manage to exceed year-earlier values.

This isn’t the first time I can recall seeing less impressive performance than what we had apparently missed after upwardly revised data were released. What a tease!

I wish I could say that this month’s indicator performance was in some way misleading, that there is reason to believe that Rhode Island’s economy isn’t slowing, but the data show rather convincingly that Rhode Island’s economy has in fact slowed during the first two months of 2013. Perhaps even worse, two critical indicators that have been strong performers for some time now may be in the process of reversing their trends.

The first of these is Retail Sales. Its performance has been stellar, as its year-over-year growth rates have exceeded 3 percent, reaching over 6 percent several times since October. It is quite possible that the combination of the lapse of the Payroll Tax Holiday and high gasoline prices will produce retail weakness throughout the first half of 2013. The other indicator is New Claims for Unemployment Insurance. This is a leading indicator that reflects layoffs. On a year-over year basis it has improved for some time now. It has, however, begun to weaken on a monthly basis, which could eventually translate into weakness year-over-year.

Government Employment	-1.0
US Consumer Sentiment	2.5	Y
Single-Unit Permits	159.4	Y
Retail Sales	-1.0
Employment Services Jobs	2.6	Y
Priv. Serv-Prod Employment	0.7	Y
Total Manufacturing Hours	-0.89
Manufacturing Wage	3.5	Y
Labor Force	0.5	Y
Benefit Exhaustions	-21.4	Y
New Claims	7.6
Unemployment Rate (change)	-1.3	Y
Y = Improved Value

Along with both of these, several of the indicators that were supposedly declining but actually improved last year have begun to slow as well. Growth in our state's Labor Force has moderated since December, as has Employment Service Jobs, a leading labor market indicator. The same is true for Private Service-Producing Employment, which saw its growth fall below 1 percent for the first time since December. To be fair, there was a “strange” behavior for payroll employment in February, as it fell from January’s level, which is very likely responsible for the slowing rates of growth for both Employment Service Jobs and Private Service-Producing Employment. Let’s hope this doesn’t signal that the employment data is getting “strange” again this year!

Rhode Island’s Unemployment Rate fell (to 9.4 percent) in February, as did the rates in many other states, which allowed Rhode Island to continue with the dubious distinction of having one of the highest jobless rates nationally. Government Employment, which reflects the effects of ongoing fiscal consolidation, hasn’t improved since August of 2010. It appears to be in the process of bottoming, as it has fluctuated around 60,000 for several months now. US Consumer Sentiment managed to squeak out a small gain, 2.5 percent, after declining in January. It remains an open question as to whether this indicator will be able to sustain its uptrend in the coming months. Single-Unit Permits grew by over 150 percent relative to last February, because permits one year ago totaled 24, the lowest number I can recall ever seeing for Rhode Island. Finally, Total Manufacturing Hours fell in February, largely the result of a decline in the length of the workweek, while the Manufacturing Wage rose.

THE BOTTOM LINE

I indicated in last month’s report that Rhode Island’s economy had shifted into a higher gear during the second half of 2012. A higher gear for Rhode Island, however, translates into a very different situation than what pertains for most other states. While you can think of Rhode Island as having shifted into third gear, most other states were already in fourth or fifth gear. Rhode Island fell very far during The Great Recession, and it has managed to make up some lost ground. But we remain far below where we once were. The slowing of growth shown by the CCI means our return to those levels will take longer.

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

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

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
70	55	74

Historical CCI Values

Monthly CCI Values (red = recession) (Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data.

Historical Annual CCI Values

Monthly CCI Values (red = recession)
(Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data.