URI Expert: RI Economy Still Staggering
Monday, February 13, 2012
After starting off 2011 on a high note, Rhode Island’s economy struggled near the end of the year, according to University of Rhode Island economist Dr. Leonard Lardaro.
Each month, Lardaro releases his “Current Conditions Index (CCI),” which analyzes the state’s economy based on 12 vital indicators. He valued the month of December at a 58 (out of 100), marking the tenth consecutive month the economy has failed to improve compared with last year. In November, the CCI value was 67, the highest rating since last February.
“The year 2011 ended on a bit of a sour note,” Lardaro said in his recent report. “While Rhode Island’s economy started off the year fairly well, as the Current Conditions Index registered very positive readings through April, in the months that followed Rhode Island’s economy began to slip towards stall speed until November. November’s CCI reading of 67 held out the prospect that we might at last be breaking out of the neutral range we had been stuck in as the year ended, and as we moved into next year. But December’s CCI reading put an end to that speculation, at least for now.”
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTLardaro: Recovery Reaches 22 Months Old
Lardaro’s monthly analysis takes into account government employment, US 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.
Lardaro said December’s rating shows that the state’s recovery is now 22 months old and the more than half of the indicators have improved, but he noted that the continued failure to exceed the year-earlier value is a major point of concern.
“So, the perpetual churning that occurs in any economy, with positive and negative forces interacting, continues here,” he said. “The positives appear to continue holding the upper hand, as the CCI remains above its neutral value of 50. But the ultimate question is how strong that hand is”
Ups and Downs
Lardaro said he believes yet-to-be-released data revisions will show that Rhode Island’s economy has actually been performing better his current ratings suggest.
Among the indicators that improved were Retail Sales (up 4.1 percent) which suggest that the state had a strong shopping season. New Claims, a leading labor market indicator that reflects layoffs, fell by 17 percent in December, following five months where it failed to improve, according to Lardaro. Benefit Exhaustions, which measures long-term unemployment, were down by 17.8 percent.
Lardaro’s report doesn’t offer all positive signs for the state’s economy, however. He said that Labor Force continued to perform poorly in December, falling by 2.3 percent. Employment Service Jobs fell by 1.1 percent while Private Service-Producing Employment increased by less than one percent. Government Employment fell once again by just over two percent.
Lardaro said December can be a difficult month to predict which way the economy is headed, but he said he expects positive news when some of the revised numbers are released.
“I truly hope the picture that emerges is materially better than what we have come to believe, since substantial downward revisions would reflect a path far more difficult for us to manage,” he said.
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