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Lardaro Report: RI Economy Shows Strength in June

Tuesday, August 11, 2015

 

Len Lardaro

Rhode Island’s economy showed more strength in June than we have become accustomed to. More importantly, this month’s data provided further evidence that Rhode Island’s rate of economic growth is continuing to move farther above its disappointing value of only 1.2 percent last year. The Current Conditions Index for June attained a respectable value of 75, its highest yet this year, as nine of the CCI indicators improved relative to their values last June. Better yet, the CCI has now matched or exceeded its year- earlier value for the last four months!

Underlying this was yet another strong month for labor market data. As was true for May, virtually all of the key labor market numbers in June moved in the direction we want them to move and for the right reasons. This was especially true for our Unemployment Rate w hich w as once again accompanied by an improving Labor Force (both on a monthly and yearly basis). For Rhode Island, as strange as this might sound, that’s a big deal, since our state’s Labor Force had until recently been declining for two consecutive years (on a year-over-year basis). Ironically, this meant that the dramatic declines in our state’s Unemployment Rate were largely spurious, since they were generally occurring in spite of improving employment, driven primarily by a Labor Force that continued to trend lower. While we have still only recovered about 70 percent of the jobs lost during the last recession, the pace at which these lost jobs are being recovered now appears to be accelerating.

Rhode Island’s June economic performance really was quite good. Nine indicators improved overall, which included four of the five leading indicators contained in the Current Conditions Index. New home construction, in terms of Single-Unit Permits, improved for the first time since the harsh winter weather ended, moving above 1,000 annual units (seasonally adjusted), its highest value since February of 2013. Even better, it finally exceeded its twelve- month average. Total Manufacturing Hours, a measure of manufacturing sector strength, also declined in June (-1.8%), its third consecutive decline, but it did have a very difficult comp to beat from last June (+4.4%). All of the remaining leading indicators contained within the CCI improved in June. US Consumer Sentiment rose at a double-digit rate (+16.6%) for the ninth consecutive month. Employment Service Jobs, which includes temporary employment and is a prerequisite to employment growth, improved at its most rapid rate since last August (+5.5%). This was its fourth consecutive improvement, and it occurred in spite of a very difficult comp from last June. Finally, New Claims, a leading labor market indicator that reflects layoffs, fell by 16.7 percent in June, sustaining its well-defined downtrend.

Retail Sales turned in another strong performance in June (+6.1%), following a double-digit rise in April and a 9.7 percent gain in May. This indicator has now improved for fourteen consecutive months. Private Service-Producing Employment increased by 2 percent in June, its most rapid growth rate since last August. Its rate of improvement has been accelerating for the past three months. Government Employment again failed to improve, declining by 1.3 percent for June, its worst performance in over a year. Benefit Exhaustions, which reflects longer-term unemployment, fell by 22.8 percent relative to last year. For those into fiction, Rhode Island’s Manufacturing Wage declined for the sixteenth consecutive time in June (-5.3%). Rhode Island’s Labor Force sustained the end of its two-year string of year-over- year declines, rising by a hefty (for us) 0.6 percent in June. And, for only the second time in a very long time, Rhode Island’s Unemployment Rate declined, this month to 5.9 percent (from an upwardly revised 6 percent in May), accompanied by large jumps in both resident employment (+13,500 or 2.6% year- over-year) and payroll employment (5,700 or 1.2%), along with a substantial decline in the number of unemployed (9,900 or 23.1%). Let’s hope our state’s Labor Force has now begun to increase on a sustained basis.UN Employment (SA,Y/Y)

Rhode Island’s economy appears to be transitioning to a more rapid rate of economic growth based not only on two solid months of labor market data, but the fact that the CCI has now matched or exceeded its year-earlier value for the most recent four months. Most im- portantly, this is occurring in spite of the fact that our state literally did nothing for several years. What we are witnessing now are the combined forces of our state’s economy continuing to heal and the benefits we are deriving from national and neighboring state mo- mentum. The good news is that the recently enacted legislation should prolong this once its effects begin to be felt later this year.

 

Related Slideshow: RI Business Rankings in US

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Rhode Island has been ranked as the 8th most eco-friendly state in the country, according to a recent study by WalletHub.

Rhode Island ranks third in environmental quality and 16th in Eco-Friendly Behaviors Ran landing them in 8th overall.

RI is behind Washington and New Hampshire who are in the six and seven spots respectively, and in front of Connecticut and Hawaii who come in at the nine and ten spot. 

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WalletHub

Rhode Island is 2015's 4th Worst State to be a taxpayer, according to a recent WalletHub report. 

Rhode Island ranks 48th of 51 with an average state and local tax price of $7,159 which is good for a 27% difference from the national average. 

The states that are directly behind Rhode Island are Wisconsin at $7,159, Nebraska at $7,298 and Illinois at $7,719 for a 37% difference from the national average.

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WalletHub

Rhode Island has the highest vehicle property taxes in the country, paying an average of $1,133 according to a report from WalletHub.

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RI also ranks 42nd in average real estate tax, paying an average of $2,779, according to the WalletHub report.

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WalletHub

WalletHub has ranked Rhode Island as the 7th worst state to be rich in in a recent in depth analysis of 2015's Best States to be Rich or Poor From a Tax Perspective

On a scale with 1 being the best, and 25 being average, Rhode Island ranks 37th in low income earners, 42 in middle income earners and 45th in high income earners. 

To see the full report, click here. 

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Gallup

Providence-metro ranks at the bottom for job creation in 2014  

Rhode Island has been ranked amongst the worst in job creation, according to a recent survey done by Gallup. 

Gallup gives the Prov-metro area an index score of 23, the lowest score is the New York- New Jersey area with 20. 

Salt Lake City, Utah and Austin-round Rock, Texas rank the highest with a score of 37. 

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Forbes

The 2014 state rankings by Forbes has just been released and Rhode Island moved up two spots from #48 in 2013 to #46 in 2014.

What does Forbes say about RI's business environment"

After Michigan and Illinois, Rhode Island has experienced the third worst net migration out of its state in the country over the past five years. With a recent unemployment rate of 7.6%—lower than only Georgia and Mississippi—residents are leaving the state in search of jobs. Rhode Island has been stuck in the bottom five overall for six straight years. One plus: labor costs are 5% below the national average, which stands out in the expensive Northeast.

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Tax Foundation

Findings from The State Business Tax Climate Index were released this morning by Tax Foundation which found Rhode Island to have the 45th best tax climate for businesses for 2015. The state's rank has not changed since last year after The Index analyzed 100 different tax variables in multiple categories. 

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The Economist

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The most damning in the commentary:

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Read More About ALEC Ranking Here

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Kauffman Foundation

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Entrepreneurial activity generally is highest in Western and Southern states
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Read More About Kauffman Ranking Here

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Free Enterprise

#47 Free Enterprise

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The Pew Charitable Trusts

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Gallup

10th Worst in Gallup's Annual Ranking of State Job Markets 2014

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The 2014 State level findings have were drawn from 201,254 interviews with employed adults across the nation. 

See the full list of rankings here. 

 
 

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