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 indicate that the Rhode Island economy is expanding, while values below 50 are indicative of contraction. The CCI attained its low value of 8 in April, 1991, as the combined effects of a recession, a banking crisis, and major defense cutbacks all took their toll on the Rhode Island economy. It has attained its maximum value of 100 on several occasions during 1984 and 1986.

* 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:

MARCH 2008: 8

The year 2008 continues to be a nightmare for Rhode Island’s economy. Its economic climate, based on values for the Current Conditions Index, would make a far better poker hand than a report card on its economic performance. Three 8’s! While that might be a very good poker hand, in terms of economic performance this has to be viewed as a “bad hand.” But, unlike a poker game, where the cards we are dealt are random and determined by the luck of the draw, Rhode Island’s economic woes are largely the result of two decades of ineffective collective economic leadership.

As I do each month, I looked feverishly at indicator performances during the “comp” period (March 2007). Once again, I was unable to find atypical values, so, there are no “excuses” for so many indicators failing to improve this March. Remember, most of the CCI values for last year were adjusted lower based on revised labor market data.

So, once again, this time for March, only one of the CCI’s twelve indicators improved. The Manufacturing Wage grew by 3 percent (compared to last March) reflecting some combination of skill shortages in that sector and a contraction of “low end” of manufacturing in this state.

CCI Indicators - % Change
Government Employment	-0.5
US Consumer Sentiment	-21.3
Single-Unit Permits	-60.6
Retail Sales	-3.6
Employment Services Jobs	-16.9
Priv. Serv-Prod Employment	-1.2
Total Manufacturing Hours	-6.9
Manufacturing Wage	3.0	Y
Labor Force	-0.7
Benefit Exhaustions	36.0
New Claims	11.9
Unemployment Rate	24.5
Y = Improved Value

The picture painted by the CCI’s labor market indicators has changed from that last month. Then, I stated that Rhode Island’s labor market was coming unhinged. In March, our labor market clearly became unhinged. Payroll employment fell by 10,100 compared to a year earlier, a decline of 2 percent. Our Unemployment Rate rose to 6.1 percent, a full percentage point above the national rate. This occurred as our state’s Labor Force continued its decline (-0.7%), as some unemployed stopped looking for work. Had those persons not dropped out of the labor force, my educated guess is that Rhode Island’s Unemployment Rate would have been much closer to 6.5 percent than its current level. Taken in context, this shouldn’t come as much of a surprise, since Private Service Producing Employment fell by 1.2 percent from a year ago, and for manufacturing, both the workweek and overall employment fell, producing a decline of 6.9 percent for Total Manufacturing Hours.

The disappointing performances don’t end there. In total, half of the CCI indicators failed to improve at double-digit rates. US Consumer Sentiment fell by 21.3 percent, Employment Service Jobs, a leading labor market indicator, dropped by an accelerated 16.9 percent, New Claims, which reflects layoffs, rose by 11.9 percent, and Benefit Exhaustions, a measure of long-term unemployment, jumped 36 percent. Single-Unit Permits fell by 60.6 percent from a year ago (55 permits for the entire state!). While this might sound disastrous, so little new home construction will help us reduce our state’s inventory of unsold homes which can be expected to rise as the result of upcoming foreclosures. Finally, Retail Sales continued it recent slide, falling another 3.6 percent in March.

Once again, I encourage everyone to look carefully at these numbers. Sadly, once again in March, the numbers speak far louder than words!

THE BOTTOM LINE

Forgive me for stating what should now be obvious, but anyone who denies that Rhode Island is in a recession is clearly delusional. More importantly, based on our state’s 2008 economic performance, we have entered a second and deeper recession phase, where prior economic activity levels will continue to become ever-more unattainable. Having to eliminate large budget deficits amid all this weakness will prove to be far more difficult than almost anyone here has imagined.

Monthly CCI Values
(Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data. Also, Existing Home Sales was dropped as an indicator starting with the 10/2001 release.)

	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	58	42	33	50	33	50	67	75	50	67
2007	50	50	42	42	67	50	58	33	25	17	17	33
2008	8	8	8

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
65	39	56	66	63	57	54	40

Annual CCI Values

Monthly CCI Values (Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data. Also, Existing Home Sales was dropped as an indicator starting with the 10/2001 release.)

Historical Annual CCI Values

Monthly CCI Values
(Note: These are revised values. Original reports sometimes specify different CCI values, based on originally released data. Also, Existing Home Sales was dropped as an indicator starting with the 10/2001 release.)