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:

DECEMBER 2014: 67

For a while, hope sprung eternal. It appeared that we might be witnessing the beginning of an ongoing acceleration in the pace of economic during the third quarter. That lasted all the way until we began receiving data from the fourth quarter. It is surprising, and a bit disappointing, how quickly the fourth quarter data extinguished that assessment. Last month, we saw the Current Conditions Index for October fall from its value of 75 during each month of the third quarter to 58. But there was a possible explanation for the decline that was related to the “mystery decline” in payroll employment for October that very likely affected one of the CCI’s indicators. Assuming that to be the case, we could view the October CCI value as 67, not quite as good as third quarter values, but among the highest of the 2014 values nonetheless. Then along comes the November data, where there are no obvious exceptions to take account of. The November CCI value was 67, still good, but once again inconsistent with the acceleration hypothesis. Furthermore, both fourth quarter values convincingly end the short-lived period where we had begun to match or exceed year-earlier CCI values.

At this point, it is safe to conclude that in spite of accelerating national economic activity, Rhode Island’s recovery has failed its first test of becoming more broadly based, at least statistically. So,as we move further into the fourth quarter, the lingering question of whether our state’s economic performance is decoupling from the accelerating national economy remains.

In November, two of the five leading indicators contained within the Current Conditions Index failed to improve. This is not necessarily as bad as it might sound, for each had very difficult “comps” to beat from last November. Total Manufacturing Hours, which measures strength in our manufacturing sector, fell for the third consecutive month, this time at a greater rate (-2.7%). Last November, however, this indicator had risen at an almost 7 percent rate, an extremely difficult hurdle to exceed. The deterioration in its growth rate has been accelerating since June. Along with this, the Manufacturing Wage declined yet again, for the ninth consecutive time, by difficult to believe 4 percent. Single-Unit Permits, a very volatile indicator that reflects new home construction, declined for the third time in four months, by 23.8 percent. Viewed along with our state’s manufacturing performance in November, the momentum provided by Rhode Island’s goods-producing sector has clearly moderated.

Government Employment	-0.5
US Consumer Sentiment	18.5	Y
Single-Unit Permits	-23.8
Retail Sales	6.6	Y
Employment Services Jobs	1.0	Y
Priv. Serv-Prod Employment	1.4	Y
Total Manufacturing Hours	-2.68
Manufacturing Wage	-4.0
Labor Force	0.4	Y
Benefit Exhaustions	-23.4	Y
New Claims	-8.4	Y
Unemployment Rate (change)	-2.3	Y
Y = Improved Value

Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, rose in November (+1.0%), following the decline last month that ended a string of three consecutive increases. New Claims, a leading labor market indicator, fell by 8.4 percent in November, its eighth improvement in the last nine months, perhaps the brightest spot of this month’s performance. Finally, US Consumer Sentiment rose sharply once again in November (+18.5%), its fourth increase following three consecutive declines.

Retail Sales remained strong in November, increasing by 6.6 percent compared to a year ago. This indicator has now improved for ten of the last twelve months. Private Service-Producing Employment rose by 1.4 percent in November, the first acceleration in its growth rate for the last four months. Not surprisingly, Government Employment failed to improve once again. For November, it declined by 0.5 percent, falling just below 60,000. Benefit Exhaustions, which reflects longer-term unemployment, fell 23.4 percent relative to a year ago. November marked the seventh double-digit improvement for this indicator in the last eight months.

Finally, Rhode Island’s Labor Force rose by 0.4 percent versus a year ago. On a monthly basis, this indicator has declined every month since June. Along with this, our Unemployment Rate fell to 7.1 percent, now the fourth highest nationally.

THE BOTTOM LINE

“The” question of the fourth quarter is whether the pace of Rhode Island’s recovery will keep pace with the accelerating national economy. Gauging this has not been as easy as one might think, since there have been a few data difficulties and several atypical “comps” along the way. So, while it remains uncertain whether the pace of our recovery will eventually accelerate, it is at least safe to say that Rhode Island’s recovery is continuing, albeit less broadly based than we would like. The improving national economy and declining energy prices can only benefit our state’s recovery, hopefully causing its pace to move more in line with the national economy.

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	7 5	75	67	75
2014	75	58	58	58	67	50	75	75	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	2013
70	55	74	76

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.

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.