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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:

JANUARY 2019: 75

 

 

Now that the labor market data for Rhode Island have been revised, we have a much better understanding of actual changes that occurred over the past few years. While many of the revisions were highly negative, most notably the employment measures, ironically annual rates of growth upon which the Current Conditions Index is based, actually improved. This highlights one of the critical secrets of Rhode Island’s recent statistical “success:” small denominators. Downward revisions to values reduce the base upon which growth rates for subsequent periods are calculated. This has been occurring with real GDP growth for several years now and has apparently spilled over to other measures, such as individual indicators in the CCI.

 

Before I detail this month’s CCI results in light of the newly revised data, let me state that this was one of the most bizarre revisions of historical data that I can recall in a very long time. First the depressing employment numbers: According to the data revisions, payroll employment, the number of jobs in RI was 7,300 lower than the earlier data for December of 2018. For January, we returned to our prior peak in December of 2006! Resident employment, the number of employed RI residents, fared little better - its December 2018 level was 5,400 less. It never was above its prior peak. The employment rate, the percentage of our working-age population that is employed was also revised downward. In addition to this (as if that’s not bad enough), the Labor Force was revised lower for every month since January of 2017. Total Manufacturing Hours and Private Service-Producing Employment were also revised lower. What was revised higher? Think Redundancy Island (i.e., RI) - Government Employment. Big surprise!

 

What was bizarre? As you can see from the table of CCI values below, many of last year’s CCI values were revised higher and, ready for this … the CCI attained its maximum of 100 twice last year. In fact, for nine of the twelve months last year, the CCI was revised higher (typically by +1 improving indicator).

 

Rhode Island begins 2019 on a positive note, kind of. The CCI rose from its December value of 58 to 75, as nine of its twelve indicators improved. In spite of this, we failed to improve on the year-ago CCI value, something likely to recur numerous times this year. Weakness that began in May of last year appears to be continuing, which is evident in several of the CCI indicators. Overall, only two of the five leading indicators contained within the CCI improved. Employment Service Jobs, a leading indicator that includes temps, rose by 0.8 percent in January, but based on upward revisions in 2017, rates of growth in 2018 have been declining since August. New Claims, the most timely measure of layoffs, improved in January (-4.8%), its third improvement in the last seven months. It remains unclear whether it will resume an downtrend anytime this year.

 

Government Employment 0.7 Y
US Consumer Sentiment -4.4
Single-Unit Permits -6.8
Retail Sales 1.2 Y
Employment Services Jobs 0.8 Y
Priv. Serv-Prod Employment 0.5 Y
Total Manufacturing Hours -7.1
Manufacturing Wage 1.8 Y
Labor Force 0.1 Y
Benefit Exhaustions -22.1 Y
New Claims -4.8 Y
Unemployment Rate (change) -0.4 Y
Y = Improved Value

 

US Consumer Sentiment fell again for the fourth  time in the last six months, no doubt hurt by the shutdown. Rhode Island’s goods-producing sector fared poorly again in January. Single-Unit Permits, a measure of new home construction, fell yet again (-6.8%), its seventh decline in the last eight months. Declining interest rates will likely not give as much of a boost to this indicator as you might think (RI has a static population). Total Manufacturing Hours, a proxy for manufacturing output, has now declined for the most recent four months, with the rate of decline accelerating dramatically over the past two months. Even downward revisions in 2017 could not help this indicator. The Manufacturing Wage actually rose in January (+1.8%), but this was only its first increase since September. 

 

Our state’s Labor Force reached its most recent peak in October and has plateaued at that value ever since, but at declining rates of annual growth. Along with this, the labor force participation rate also fell in January. The Unemployment Rate has remained at 4 percent since October, certainly not the result of robust job growth. 

 

Retail Sales grew again in January (+1.2%), Government Employment rose from its level a year ago for a fifth consecutive month (+0.7%), Private Service-Producing Employment growth remained weak (+0.5%), and Benefit Exhaustions, the timeliest measure of longer-term unemployment, fell sharply (-22.1%).

 

 

 

 

 

  

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 92 83
2018 75   92 75 67 92 83 75 67 67 42 83 58
2019 75                        

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 2017 2018  
70 55 74 75 63 64 56 85    

 

Historical CCI Values

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

 

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