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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:

NOVEMBER 2009: 50

Rhode Island’s economy reached a landmark in November. While still mired in a recession, for two and a half years at this point, the level of economic activity here improved again, this time moving to a neutral level, as the Current Conditions Index rose to 50. Compared to a year ago, six of the twelve CCI indicators improved. But not only did Rhode Island’s economy fail to decline in November, the CCI beat its year-earlier value for the seventh consecutive month. In addition to this, eleven of the twelve CCI indicators either improved or were close to improving on a monthly basis.

Clearly, the course of Rhode Island’s recession has continued to evolve from what we witnessed in 2008, the “recession from hell,” into a the late stages of a “traditional” recession, based on CCI readings over the last seven months. DO NOT assume that our economy will continuously improve from here. As we move toward the end of this recession, expect fluctuations in CCI values to continue, so that a sustained period of above-50 values, the hallmark of a recovery, will likely not begin for about four to six months (optimistically).

Focusing on the November CCI performance, there were six improving indicators, all of which displayed healthy changes. US Consumer Sentiment, our “star” performer of late, rose at a 22 percent again in November, its eighth consecutive year-over-year improvement. Retail Sales, one of the worse performing indicators of late, rose dramatically in November, by 6.4 percent, its first improvement in over a year. Our state’s Labor Force continued its recent growth, rising by another 0.6 percent compared to a year ago. Growth in the Manufacturing Wage remained rapid in November, a 2.9 percent rate, tied for its most rapid rate of increase since July. The other two improving indicators are both leading

CCI Indicators - % Change
Government Employment -2.2
US Consumer Sentiment 22.2 Y
Single-Unit Permits  67.2 Y
Retail Sales 6.4 Y
Employment Services Jobs -10.2
Priv. Serv-Prod Employment -3.2
Total Manufacturing Hours -12.0
Manufacturing Wage 2.9 Y
Labor Force 0.6 Y
Benefit Exhaustions 53.7
New Claims -21.43 Y
Unemployment Rate 39.6
Y = Improved Value

indicators. Single-Unit Permits, which measures new home construction, rose by 67.2 percent in November, but this growth rate was mainly the result of a relatively small number of permits a year ago. New home construction here has been virtually non-existent for all of this year. New Claims, which reflect layoffs, improved at an accelerating rate, falling by 21.4 percent compared to last November.

In spite of the good news, there were several negatives this month. Future job prospects based on Employment Service Jobs, another leading indicator, remained discouraging, as these fell 10.2 percent compared to a year ago. In spite of this decline, this indicator appears to have stabilized on a monthly basis since March of this year. Total Manufacturing Hours fell again at a double-digit rate, declining by 12 percent in November, as both employment and the workweek fell. While Rhode Island’s manufacturing sector continues to weaken relative to this sector nationally, on a monthly basis at least, it appears that the decline here may be moderating. Private Service-Producing Employment fell again at a rate in excess of 3 percent (by 3.2%), reflecting the grim job prospects here. Government Employment, driven largely by budget woes, declined by 2.2 percent in November, a more rapid decline than the past two months. Finally, Benefit Exhaustions, which reflects long-term unemployment, surged again in November, this time by just under 54 percent while our state’s Unemployment Rate fell from October but was significantly higher than a year ago (12.7% vs. 9.1%).

THE BOTTOM LINE

Rhode Island has been through a lot in the two and a half years it has been in recession. Following the economic freefall in late 2008, we continue to fight our way back toward positive growth. The first step was more slowly declining activity. The second step, accomplished this month, was re-establishing a neutral CCI value. Hopefully we will register above-50 values in the early part of 2010, signaling the beginning of a recovery

 

  

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 42 25 42 33 42 50  

You can download monthly reports in PDF format starting
with January 1999 by clicking on the monthly index value.
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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

Copyright © 2008,2009 Leonard Lardaro, Ph.D. All rights reserved.

 

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