NEW: Report Says RI Economy Picking Up Steam
Monday, March 11, 2013
Last month, URI economist Dr. Len Lardaro turned heads when he pronounced that Rhode Island’s economy was on the rebound after issuing his December, 2012 Current Conditions Index (CCI) Report that said the Ocean State posted its largest month-to-month gain for its best CCI score in over a decade.
And while Lardardo isn’t quite as optimistic to start 2013, he still believes the state is moving in the right direction.
In his January CCI report, released today, Lardaro praises the revisions made to the state’s labor market data that show a much more positive look at the current economic climate in the Ocean State than previously reported.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST“While I have been anticipating these for quite some time now,” he said. “It appears that most people in the state remained unaware of what was actually happening until very recently.”
The Numbers Don’t Lie
Lardaro said that, contrary to the “official data,” he’s been projecting strong evidence of growth and momentum in the state and the revised figures appear to have finally caught up.
“The new data confirm my prior analysis,” he said. “Not only has Rhode Island's economy been improving for some time now, the pace of activity here actually accelerated during the third and fourth quarters of 2012.”
Lardaro’s CCI report shows that there has been a positive change in nine of 12 of the categories measured and, for the month of January, Rhode Island scored a CCI of 75, which is eight points higher than January of 2012 and eight points lower than the revised figure of 83 for December of last year.
Lardaro highlighted the 6.9 percent growth in retail sales during the first month of 2013 and said it’s year-over-year growth “has matched or exceeded six percent for three of the past four months.”
“Along with this, our state's Labor Force appears to have finally begun to rise again, starting in last August,” he said, underscoring the 0.7 percent increase in that category. “That upward trend makes the improvements in our state's Unemployment Rate more significant.”
Lardaro also selected Private Service-Producing Employment, which was up 1.3 percent, and Employment Service Jobs, which rose 6.5 percent, as noteworthy positive signs.
Not All Positive
There were a couple of distressing trends in Lardaro’s latest report, however.
“Employment, which reflects the effects of ongoing fiscal consolidation, hasn’t improved since August of 2010,” Lardaro said, noting the 0.8 percent decrease in that category. “It might be in the process of bottoming, assuming that our recent momentum is sustained, as it has fluctuated around 60,000 for several months now.
The URI economist also pointed to US Consumer Sentiment, which was down 1.6 percent, and Single-Unit Permits, which dropped 8.4 percent, as disappointing results for the month of January.
A Word of Advice
Lardaro says it’s important when analyzing trends, however, to understand exactly what the CCI actually measures.
“We must be careful to distinguish between the levels of economic activity and their rates of growth,” he said, “The CCI, which is a momentum indicator, reflects how broadly based economic activity is. The greater the number of improving indicators, the more broadly based is economic activity, indicating greater underlying momentum. It does not focus on levels.
“So, what Rhode Island is witnessing is a broadening of economic activity that has increased our momentum. The levels of key variables like payroll employment, however, remain well below the values they had attained during the last recovery.”
Lardaro concluded his January report with a key message to those in power in the state.
“Rhode Island’s elected officials have kept waiting for the economy to turn around, as that was supposed to cure all of our ills,” he said. “Well, I have good news and bad news on this front. The good news is that Rhode Island’s economy did turn around in 2012. The eagerly awaited turn in the economy has been here for some time now. The bad news is that while Rhode Island was improving, so too were almost all other states.
We are better in absolute terms but remain lacking in relative terms. So, when our state’s jobless rate finally moved below 10 percent, we became the state with the highest jobless rate!”
To see Lardaro’s full report, click here.
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