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:

SEPTEMBER 2009: 33

September saw a continuation of the recent momentum for Rhode Island’s economy. Clearly, our state’s economic status can now be properly viewed as that of a “typical” recession,” a distinct improvement from 2008 which was the worst year for our state’s economy since 1991. While the Current Conditions Index fell slightly to 33 in September, as four of its twelve indicators improved, this was the fifth consecutive month for which the CCI beat its year-earlier value. And, looking at month-to-month improvements in CCI indicators, seven either improved relative to their August values or were little changed.

As has been the case for a while now, some of this can be attributed to weak “comps” from a year ago. That is a fairly typical occurrence when an economy moves toward the end of a recession and as it progresses through the early stages of recovery. For the time being at least, Rhode Island’s economy remains in recession. But as the CCI values since May indicate, we are continuing to move in the direction of an eventual recovery, hopefully in the first quarter of next year.

Focusing on September’s improving indicators, US Consumer Sentiment, our “star” performer of late, rose by 4 percent, its sixth consecutive year-over-year improvement. Our Labor Force continued its recent growth, rising by another 0.5 percent compared to a year ago on top of prior annualized rates in excess of 6 percent. Growth in the Manufacturing Wage accelerated in September, rising to 2.3 percent compared to a year ago, moving the wage above $14 per hour for the fourth consecutive month. Finally, New Claims, which reflect layoffs, continued to improve, falling by 13.4 percent compared to last September. More importantly, this leading indicator has leveled off in recent months.

CCI Indicators - % Change
Government Employment	-1.3
US Consumer Sentiment	4.0	Y
Single-Unit Permits	-9.8
Retail Sales	-8.4
Employment Services Jobs	-15.7
Priv. Serv-Prod Employment	-3.5
Total Manufacturing Hours	-14.0
Manufacturing Wage	2.3	Y
Labor Force	0.5	Y
Benefit Exhaustions	60.9
New Claims	-13.4	Y
Unemployment Rate	52.9
Y = Improved Value

While there are clearly positive elements in this month’s report, namely the CCI’s overall value and the number of monthly improving indicators, the negatives associated with discouraging performances relative to a year ago remain. Retail Sales fell by another 8.4 percent in September, the latest in a string of consecutive declines that extends all the way back to April of 2008. Future job prospects based on Employment Service Jobs, another leading indicator, remained discouraging, as these dropped 15.7 percent compared to a year ago. This indicator appears to have stabilized on a monthly basis, however. Total Manufacturing Hours registered yet another double-digit decline, falling by 14 percent in September, as employment fell and the workweek shrank by almost 1.4 hours. This continues a divergence from the national trend of a possible manufacturing-sector bottom. Along with this, the rate of decline in Private Service-Producing Employment accelerated in September to 3.5 percent. Single-Unit Permits fell by 9.8 percent in September, as new home construction here remains virtually non-existent. Government Employment, driven largely by budget woes, fell by 1.3 percent in September, a slightly improved rate of decline. Benefit Exhaustions, which reflects long-term unemployment, surged once again in September, rising by almost 61 percent compared to a year ago. Finally, our Unemployment Rate rose to 13 percent in September, preserving our national ranking of #3 (behind Michigan and Nevada).

THE BOTTOM LINE

The national economy appears to have begun its recovery in July. While Rhode Island will not emerge from its recession until the first quarter of next year, the foundations for an eventual upturn are beginning to fall in place. The strength and durability of those foundations will be influenced critically by fiscal decisions and structural changes to our state’s economy instituted in the next few years. The long-run begins now!

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

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.