Lardaro: August CCI disappoints, but not unexpectedly
RHODE ISLAND'S Current Conditions Index struggled in August, falling to 67 from 92 a year ago. Leonard Lardaro, who released his monthly CCI on Sunday, said the state will likely post less-than-ideal conditions through the end of this year.
SOUTH KINGSTOWN - Rhode Island’s economic health sustained a blow for the second time in eight months, and may struggle to improve for the rest of the year, according to University of Rhode Island economist Leonard Lardaro, who released his Current Conditions Index on Sunday.
Lardaro’s index, which uses a dozen data points to measure momentum in the state economy, came in at 67 for August, down from 92 a year ago.
This past June also registered a decline, but every other month, including July, showed improvement, and that provides a little good news, Lardaro said.
With only eight of the 12 economic indicators for August showing improvement, however, it is likely the rest of the year will fail to beat last year’s higher values, he said. If that happens, the result would be a slowdown in Rhode Island’s growth rate, compared with the end of 2012, he said.
“Sadly, but not surprisingly, the combination of fiscal drag from Washington, [D.C.] and the government shutdown should only make these yearly divergences worse,” the report stated.
Ironically, one indicator, U.S. consumer sentiment, showed continued improvement for a seventh consecutive month, rising 10.7 percent. However, the improvement is not sustainable, given the disappointing news in other sectors, he said.
“Expect to see [consumer confidence] begin to weaken, given our nation’s fiscal dysfunction,” Lardaro wrote.
Other negative developments in the report include a rise in new claims for unemployment, a first-time drop this year in employment service jobs, and a decline in the labor force for the fifth time this year. The labor force decline was distorted, however, by seasonal adjustment issues involving students, the report found.
Retail sales remained strong, growing at 6.2 percent, but last August was stronger, at 9 percent. Government employment rose for the first time in a while, and single-unit permits, a leading housing indicator, rose but did not improve over last year, the report stated.
In what has become a regular refrain, Lardaro points out that even though the state economy is showing good momentum overall, in six of the eight months to date, the rate of growth since pre-recession times of 2006 appears to be slowing.
If the rest of the year shows declines, Lardaro said, “it will now take even longer to return to where we were pre-recession.”