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:

APRIL 2009: 8

Rhode Island’s economy began the second quarter on a somewhat less negative note than the first quarter ended on. The good news, if you want to call it that, is that the Current Conditions Index for April was not 0 — it returned to 8, the value it appears to be stuck on. Sadly, this was not the result of exceedingly difficult “comps” a year ago. In fact, for all but one of the CCI indicators, the opposite was the case in April.

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!

CCI Indicators - % Change
Government Employment	-2.2
US Consumer Sentiment	4.1	Y
Single-Unit Permits	-61.3
Retail Sales	-6.5
Employment Services Jobs	-23.2
Priv. Serv-Prod Employment	-3.3
Total Manufacturing Hours	-12.0
Manufacturing Wage	-0.7
Labor Force	-0.9
Benefit Exhaustions	82.7
New Claims	26.2
Unemployment Rate	56.3
Y = Improved Value

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.

THE BOTTOM LINE

Rhode Island’s economy continues to decline, but at slower rates. We are now several months into the process of recovery, which is important to keep in mind since so many performance measures, most notably labor market indicators, continue to be dismal. These will eventually turn. Ultimately, though, the extent of their improvement will be largely determined by budget decisions now being made (or not made).

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	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	8	8	0	8	0	8	0	8	8
2009	17	8	0	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	2008	2009
65	39	56	66	63	57	54	40	7

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.