NEW: RI Economy Continues Recovery
Monday, February 14, 2011
Rhode Island's economy is back on the road to recovery, according to University of Rhode Island economist Leonard Lardaro.
His most recent analysis of the state of the economy -- the Current Conditions Index -- shows growth for the month of December. The index puts the state economy at 58 on a scale of 0 to 100 -- up eight points from November and sixteen from October.
Figures above 50 indicate economic growth and figures below that signal a recession. The index is calculated based on several factors, including the change in the unemployment rate, retail sales, consumer sentiment, and permits issued for single-family homes. 58 marks a return to a four-month growth period between June and September, and a 25-point increase from December 2009.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST"My greatest fears were that either this recovery would stall or worse yet, end abruptly moving us back to where we clearly don't want to be," said Lardaro. "The December Current Conditions Index reading restored my faith on this front -- for now at least."
7 of 12 Economic Indicators Improved
Seven of twelve indicators improved compared to a year ago, according to Lardaro's report. Retail sales, "one of the foundations upon which Rhode Island's recovery has been built," increased 8.7 percent -- marking its tenth increase in eleven months. US Consumer Sentiment rose 2.6 percent, while manufacturing hours and wages both showed improvement with 1.6 and 3 percent increases, respectively. Single-unit permits, which reflect new home construction, also increased 3.1 percent.
Employment statistics also demonstrated economic growth, with Benefit Exhaustions, an indicator of long-term unemployment, falling 13.4 percent and the state unemployment rate falling 1.2 percent -- from 12.7 percent to "only" 11.5. The latter statistic is partly a result of declines in the Rhode Island labor force, which fell 0.2 percent compared to a year ago.
Lardaro noted that "Rhode Island's recovery might even have more strength and momentum than recent reports indicate as we will soon see the labor market data revisions going back to late 2009. If the historical pattern for these revisions holds, prior employment data should be revised (rebenchmarked) higher, which is my expectation at this point."
Layoffs still on the rise
The remaining four indicators failed to improve. New Claims, a leading indicator measuring layoffs rose 25.4 percent and Employment Service Jobs, another leading labor marker indicator, fell 12.6 percent. Private Service-Producing Employment fell 0.2 percent and Government employment declined 0.3 percent.
"Through December, the available labor market data point to a very fragile state economy," Lardaro said. He added, however, that "Typically, in the early stages of recoveries, revisions are higher, so things weren't as bad as they had appeared to be. I expect that to be the case this time."
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