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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. |
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MONTHLY
HIGHLIGHTS:
I was hoping that October would extend the momentum
gains experienced by the Rhode Island economy in September, where the Current
Conditions Index finally rose into the expansion range (=58) and was
improving on a monthly basis for three months.
Unfortunately, that was not meant to be. The Current Conditions Index for
October fell back to 50, its neutral value, as only six of the twelve
indicators improved relative to a year ago. Of course, this is not the end of
the world, but it is somewhat of a setback in terms of the cyclical momentum
of Rhode Island’s economy. What all these numbers reflect is the uneven
nature of our state’s current economic climate, where despite parts of the
economy not performing well on average, there
are still areas of strength. October marked the
fourteenth consecutive month for which the Current Conditions Index failed to
exceed its year-earlier value. But there were several encouraging signs, even
with this month’s neutral value. Retail Sales remains very strong, rising by 5.9 percent in October
relative to a year ago. That is very
encouraging in light of housing weakness, where we
continue to witness ongoing declines in Single-Unit Permits,
reflective of new home construction. In October, it fell by 8.8 percent,
which is somewhat good news seeing that it had fallen at double–digit rates
on a yearly basis for quite some time. Generally, housing and Retail
Sales are highly correlated, for obvious reasons. If and
when Retail Sales enters a sustained downtrend, we will know
that there are real problems with our state’s economic momentum. For now,
that seems like a distant concern. Perhaps the best
news this month is that Rhode Island’s Labor Force actually rose on a
yearly basis for a second consecutive month, and it has now increased for
seven months. This will help ease labor shortages and could moderate wage
growth. The most important thing, however, is that when the Labor
Force rises, persons who are unemployed enter or re-enter the Labor
Force, often causing the Unemployment Rate to
increase. So, increases in the Unemployment Rate do not
necessarily signal economic weakness, as long as
they are accompanied by an increased Labor Force. Since Rhode Island’s labor force
participation rate (see table) remains well below its 2007 value, however,
the official (naïve) rate is not an accurate reflection of labor slack in our
state’s economy. The far more accurate Participation-Adjusted Unemployment
Rate remained at 4.5 percent in October and has been decreasing over the
last several months. Looking at the
strong October performers, US Consumer Sentiment
sustained its recent strength, rising by 6.6 percent in October, continuing a
string of improvements that began in February. The Manufacturing
Wage rose by 7.2 percent, well above the rate of inflation. As stated earlier,
Retail Sales rose sharply, and, in a rarity for Rhode
Island, our Labor Force actually rose on a
yearly basis. Finally, Government Employment ended
a recent pair of consecutive annual declines, rising in October by 1.1
percent. Unfortunately, it
was not very difficult to find negatives in October. New
Claims, reflective of layoffs, failed to improve after falling for two
months (+14.2%). Total Manufacturing Hours
extended its well-defined downtrend, falling for an
eleventh consecutive month (-4.0%). Employment Service Jobs, which
include “temps,” and is a leading economic indicator of job gains, has now
declined for thirteen consecutive months, this month by 5.5 percent. As noted
earlier, Single-Unit Permits, or new home construction,
declined by 8.8 percent in October. And Private Service Producing Employment
(non-manufacturing and non-government employment) fell for the seventh
consecutive month, by 0.9 percent. Benefit Exhaustions, which
reflect long-term unemployment, surged by 34.7 percent in October, its
seventh consecutive double-digit increase. Has Rhode Island
emerged from its “statistical recession”? As of October, the answer is no,
but it appears that momentum may be
moving us away from that designation. There were several strong indicator improvements this month, but the indicators that
failed to improve did so with very disappointing values that have generally
been sustained. However, several critical non-CCI indicators are showing
promise. Resident employment rose on a yearly basis for the fourth
consecutive month and on a monthly basis for seven
months, although payroll employment (the number of RI jobs) fell again, by
2,500 (Job gains = 3,300, job losses = 5,800, see
below). Revisions to the labor market data should shed light on whether this
divergence is accurate or not. Let’s hope those revisions are not as brutal
as those of last year! |
Monthly CCI Values (red = contraction)
|
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 |
|
92 |
75 |
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2000 |
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2001 |
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2002 |
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2003 |
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2004 |
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2005 |
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2006 |
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2007 |
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17 |
17 |
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2008 |
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2009 |
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2010 |
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2011 |
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2012 |
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2013 |
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2014 |
67 |
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2015 |
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2016 |
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2017 |
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2018 |
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2019 |
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2020 |
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2021 |
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2022 |
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2023 |
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You can
download monthly reports in PDF format starting
with January 1999 by
clicking on the monthly index value.
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 |
2017 |
2018 |
2019 |
70 |
55 |
74 |
75 |
63 |
64 |
56 |
85 |
79 |
61 |
2020 |
2021 |
2022 |
2023 |
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26 |
65 |
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Copyright © 2023
Leonard Lardaro, Ph.D. All rights reserved.