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, 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.

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.