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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:

AUGUST 2016: 75

 

 

 

What a difference a quarter makes! Following a totally forgetful second quarter, where we once again witnessed the phenomenon where when the US economy hiccups, Rhode Island’s economy falters, we now seem to be regaining the momentum that faded away after the first few months of 2016. July’s Current Conditions Index, which was revised higher to 67 based on new Retail Sales data, marked our return to expanding economic activity after having been mired in sub-par activity throughout the entire second quarter. Notably, the CCI exceeded its year-earlier value for the first time this year. Then comes August. The CCI rose to 75 from July’s upwardly revised 67, to the highest level of 2016. While the CCI for August of this year failed to exceed its value last July, it did manage a tie. So, for two consecutive months now, the CCI has matched or exceeded its year-earlier value, something we all too seldom see. August was the third such occurrence in 2016.

 

Where we go from here is anyone’s guess. Sadly, since our state’s elected officials did virtually nothing to improve our state’s cyclical performance and its ability to withstand periods of national weakness for so many years, our recent experience should serve as an all too vivid reminder that Rhode Island remains highly vulnerable to national economic weakness. Worse yet, we also tend to benefit less from national economic growth than do most other states. As asymmetries go, that’s pretty ugly! So, our fate for the remainder of this year, and into the indefinite future for that matter, will be determined almost entirely (and asymmetrically) by national economic momentum.

 

Throughout the third quarter thus far, the relative importance of our economic negatives has receded relative to our positives, as our positive momentum factors have once again overtaken the negatives. The asterisk taken from our period of weakness remains: the indicators that weakened were exactly those that historically point to economic slowing. Several of them are still showing some weakness.

 

For August, nine of the twelve indicators contained in the CCI improved. Two CCI indicators that have been acting atypically did so again this month. Government Employment, rose for only the second time since August of last year (+1.7%). New Claims, the most timely measure of layoffs, rose sharply in August (+12.5%), its fifth increase in the last six months. While we cannot and should not rely on increases in Government Employment as an engine of our state's cyclical momentum, the same is not true New Claims, which is a leading labor market indicator. Sustained cyclical gains require resumption of its prior downtrend.

 

Government Employment 1.7 Y
US Consumer Sentiment -2.4
Single-Unit Permits 1.2 Y
Retail Sales 2.9 Y
Employment Services Jobs -0.1
Priv. Serv-Prod Employment 1.5 Y
Total Manufacturing Hours 0.5 Y
Manufacturing Wage 4.7 Y
Labor Force 0.4 Y
Benefit Exhaustions -7.3 Y
New Claims 12.5
Unemployment Rate (change) -0.2 Y
Y = Improved Value

Looking at the August CCI performance overall, only three of the five leading indicators contained in the CCI improved. However, all three had difficult comps from a year ago. US Consumer Sentiment fell by 2.4 percent in August, its eighth decline in the last nine months. Single-Unit Permits rose in August (1.2%) for only the second time since April. Its level remained well below 1,000 annual units. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, fell slightly in August (-0.1%), but this was its sixth consecutive decline. It should be noted that all three of these indicators had difficult comps. The pleasant surprise here was Total Manufacturing Hours, a proxy for manufacturing output. It rose in August for the fourth consecutive month, although the impact of job gains were largely offset by a declining workweek.

  

On a monthly basis, our Labor Force rose for the third consecutive time, indicating that some unemployed, by resuming job search, are reflected in the Unemployment Rate and that its slight monthly uptick occurred for an acceptable reason. On an annual basis, our Labor Force rose for the first time in twenty-seven months! Retail Sales rose by 2.9 percent in August, its second increase in the past six months. Private Service-Producing Employment growth accelerated in August, and Benefit Exhaustions fell by 7.3 percent.

 

 

THE BOTTOM LINE

Following a truly disappointing second quarter, Rhode Island’s economy appears to have regained its momentum in the third quarter, as the CCI has once again moved into its expansion range. Where we go from here will be determined almost entirely by the national economy. Hopefully, Rhode Island’s second quarter slide will serve as a wakeup call to our state’s elected officials that even now, almost ten years after our prior employment peak, we remain far too vulnerable to slowing national activity. Much remains to be done, especially the adoption of numerous structural changes that hopefully will insulate us from our continuing national downdraft potential.

 

  

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        

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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