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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:

APR 2015: 58

 

 

 

Here we go again! Rhode Island began the second quarter in much the same way it had progressed throughout the first quarter - mediocre economic performance. For April, the Current Conditions Index fell from its March value of 67, which had actually beat its year-earlier value, a rare event indeed, back to 58, its value for the other months of 2014 thus far. Clearly, no weather-related distortions were at work in April. To put things here into a rather depressing perspective, Rhode Island's economy has failed to demonstrate the ability to consistently exceed its performance in the prior year. According to recently released data, we find ourselves unable to match or exceed a year for which the Rhode Island economy grew at a 1.2 percent rate, which was itself a noticeable decline from our 2013 growth rate of 1.9 percent. Will the upcoming months be more of the same, even without any excuses for weather, or will the pace of economic activity here finally begin to accelerate along with that of the national economy? Stay tuned. There is some reason for optimism: Governor Raimondo has accomplished more meaningful change with her first budget (assuming this largely passes) than this state has undertaken since before The Great Recession.

 

Government Employment -0.2
US Consumer Sentiment 14.0 Y
Single-Unit Permits -5.8
Retail Sales 10.7 Y
Employment Services Jobs 3.6 Y
Priv. Serv-Prod Employment 1.2 Y
Total Manufacturing Hours -0.8
Manufacturing Wage -4.2
Labor Force -0.3
Benefit Exhaustions -32.8 Y
New Claims -13.1 Y
Unemployment Rate (change) -2.0 Y
Y = Improved Value

 

Rhode Island's April economic performance was worse than it was in March, as only seven of the twelve CCI indicators improved relative to their values last April. Of the five leading indicators in the Current Conditions Index, three improved in April. And two of them were assisted by easy comps from last April. The results for the two leading indicators that failed to improve stand out. Even without weather-related distortions, new home construction failed to improve, as Single-Unit Permits fell by 5.8 percent from last April. While this is admittedly a volatile indicator, the 745 permits (at an annual rate) in April was well below its twelve-month average. The recent upturn in mortgage rates could pose head winds for this indicator. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in April (-0.8%) following two months of improvement, as a sharp decline in the workweek more than offset the positive effects of a small employment gain. Unlike the last two months, the change in manufacturing employment was proportionately smaller than that of the workweek, causing Total Manufacturing Hours to fall. Suffice it to say that April was not a very good month for Rhode Island's goods-producing sector.

 

Each of the remaining leading indicators contained within the CCI improved in April. US Consumer Sentiment rose at a double-digit rate (+14%) for the seventh consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved by a hefty 3.6 percent, its second consecutive improvement. However, this number was somewhat inflated based on an extremely weak comp (-3.3%). Finally, New Claims, a leading labor market indicator, fell by 13.1 percent in April, sustaining its well-defined downtrend following a distorted December value.

 

Retail Sales turned in an exceptional performance in April (+10.7%), helped greatly by a weak comp last April (–4%). Still, Retail Sales here remain very strong. This indicator has risen for fifteen of the last sixteen months. Private Service-Producing Employment increased by 1.2 percent in April, weaker than its March growth, and only its second greater than one percent rate since October. Government Employment again failed to improve, declining by 0.2 percent for April. Benefit Exhaustions, which reflects longer-term unemployment, fell by 32.8 percent relative to last year. For those into fiction, Rhode Island's Manufacturing Wage declined for the fourteenth consecutive time in April (-4.2%). Rhode Island's Labor Force continued its well-defined downtrend that began in late 2012 and intensified after June of 2014. April was the twenty-fourth consecutive year-over-year decline in our Labor Force. This downtrend continued to be fundamental in helping our state's Unemployment Rate fall to 6.1 percent in April.

 

THE BOTTOM LINE

Rhode Island's economic performance thus far in 2015 has been disappointing, although weather did distort first quarter statistics. We begin the second quarter with what seems like more of the same, but with a major difference: Governor Raimondo has put forth more measures to move Rhode Island out of its longer-term doldrums than had been put forth in total since the last recession. More importantly, many of these measures involve investment-oriented spending, the key element so lacking over the years here. These programs, when passed, will entail lags until their major effects are felt, so look for relief to appear toward the end of this year.

 

  

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                

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          
70 55 74 76 64          

 

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

 

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