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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:
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. |
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As bad as this sounds, upon digging more deeply into the data evidence continues to mount that Rhode Island is in the early stages of the process of recovery. As I have noted in the past few reports, the critical prerequisite for Rhode Island to eventually emerge from this recession is consistent improvement in month-to-month indicator changes. Over the last few months we have begun to see this, as more indicators have either improved relative to their values the prior month or have come very close to showing such improvement than was true for the yearly changes reflected in the CCI indicators. For April, that number rose to eight. Even more encouraging is the fact that the single CCI indicator that improved in April was not the Manufacturing Wage, our sole improving indicator for quite some time. Instead, the improving indicator was US Consumer Sentiment, which rose by 4.1 percent, its first improvement since August of 2008!
There were mixed signs from the CCI’s leading indicators. Single-Unit Permits dropped by 61.3 percent compared to a year ago, as new home construction remained virtually non-existent here. Employment Service Jobs fell sharply relative to last April (-23.2%) but only slightly compared to March. Total Manufacturing Hours registered another significant decline, this time by 12 percent compared to last April, but was virtually unchanged compared to March. New Claims, which tracks layoffs, jumped in April (+26.2%), but didn’t explode higher as we had seen in the prior two months. Its value was significantly lower than last month, although the role of phone backlogs makes assessing the actual magnitude of change difficult. Finally, as noted earlier, US Consumer Sentiment improved, compared to both March and last April. In spite of this mixed performance by the leading indicators, economic weakness continued to be readily apparent in our state’s labor market. Private Service-Producing Employment fell by another 3.3 percent, although it posted only a small monthly decrease. The lack of job opportunities here has pushed this indicator to annual rates of decline of around 3 percent since the end of last year. Government Employment fell by 2.2 percent in April, as ongoing budget woes continued, but this was actually an improvement over its level in March. For only the second time in a while, our Manufacturing Wage declined, remaining below the $14 hourly level. Finally, our state’s discouraging employment picture once again caused Benefit Exhaustions, which reflects long-term unemployment, to surge, this time by 82.7 percent compared to a year ago (we want this to decline). Benefit Exhaustions has now risen at 40 percent or higher annual rates since August of 2008! Retail Sales continued to deteriorate sharply, falling by 6.5 percent in April, its sharpest rate of decline since November of last year.
You can download monthly reports
in PDF format starting
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Historical Annual CCI Values
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Copyright © 2008,2009 Leonard Lardaro, Ph.D. All rights reserved.
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