URI Expert: RI Economy Following ‘Stop and Go’ Pattern
Monday, November 12, 2012
Rhode Island’s economy is following a “stop and go” pattern that has left the state unable to sustain and extend momentum in recent months, according to University of Rhode Island economist Dr. Leonard Lardaro.
Every month, Lardaro releases his “Current Conditions Index (CCI),” which analyzes the state’s economy based on 12 vital indicators. He valued the month of September at a 50/58 (out of 100), which takes into account the current data and the data he predicts will be revised. In 2011, Lardaro never valued the state above a 67. Its low point was a 42 last August.
“So, while on average, underlying strength here has been sustained, throughout the past six months a frustrating pattern has emerged where faster-growth months are followed by slower growth the next month,” Lardaro writes.
Lardaro’s monthly analysis takes into account government employment, U.S. consumer sentiment, single-unit housing permits, retail sales, employment services jobs, private service-producing employment, total manufacturing hours, manufacturing wage, labor force, benefit exhaustions, new claims, and the unemployment rate.
In September, U.S. consumer sentiment, total manufacturing hours, manufacturing wage, benefit exhaustions, new claims, and the unemployment rate all improved.
“U.S. Consumer Sentiment once again surged by over 30 percent, helped by recent stock market momentum and actions by the Fed,” Lardaro writes.
Lardaro believes the state’s recovery is now 31 months old and said momentum, has been sustained in recent months.
“In spite of the uneven pace of overall economic activity here during the past six months, on average, reasonably strong momentum has been sustained, no matter what the ‘official’ labor market data continue to show,” he said. “The issue now shifts to which way our momentum will move as we come ever closer to the end of this year and the potential threat of the US falling off the fiscal cliff. One thing is certain: our state’s government has no plan whatsoever for dealing with any unfavorable scenario that might emerge.”