Lardaro: Economic momentum sagged in January

JANUARY'S ECONOMIC momentum sagged, according to University of Rhode Island economist Leonard Lardaro, who said the Current Conditions Index, which measures 12 key indicators, registered 58, not much above 50. Indices above 50 signal economic growth. / COURTESY LEONARD LARDARO
JANUARY'S ECONOMIC momentum sagged, according to University of Rhode Island economist Leonard Lardaro, who said the Current Conditions Index, which measures 12 key indicators, registered 58, not much above 50. Indices above 50 signal economic growth. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – January’s economic momentum sagged – an inauspicious start to 2015, Leonard Lardaro, an economist with the University of Rhode Island, said Monday.
The Current Conditions Index, which measures economic momentum using 12 key indicators, registered 58, not much above the level of 50. Indices higher than 50 suggest economic growth, while a value below 50 indicates contraction.
The figure of 58 comes on the heels of R.I. Department of Labor and Training revisions to unemployment rates and other data, which in itself provides a mix of good and not-so-good news, Lardaro says.
On the positive side, due to the revisions, payroll employment, the number of jobs in the state (not including the self-employed or those Rhode Islanders working out of state), performed better than originally reported in 2014, returning to 2008 levels, Lardaro said. Yet, the state’s employment peaked in December of 2006, more than eight years ago, and only about two-thirds of the jobs lost since then have been replaced, he said.
Despite a steadily declining unemployment rate that is now at 6.5 percent in Rhode Island, Lardaro told Providence Business News that the labor force here failed to improve for 22 consecutive months year over year, with steeper declines from May 2014 through January of this year. The labor force, which reflects employed and unemployed people available for work, was down 1.1 percent in January, he said.
That failure to improve “is huge,” Lardaro said. “It’s clearly in a downward trend, and that got more pronounced over the last six months. And resident employment was revised lower [by the DLT], so I consider the dramatic recent improvements to the unemployment rate with a lot of skepticism.”
With new labor market data revisions, the CCI values reported in 2014 were not as satisfactory as they had seemed, Lardaro said. Three months were revised higher, but three months also were revised lower. That is not “a wash,” he said. It indicates Rhode Island failed to sustain a string of values of 75 for the CCI from July through September. The only time 75 was reached was in September, he said.
“It’s very disappointing,” Lardaro said. “We’re in a recovery, but this is what happens when the state doesn’t pursue major structural reforms to taxes, fees, regulations and energy costs.”
Some of the negative indicators in January that proved a drag on economic momentum included single-use permits for new construction, down 8.3 percent; total manufacturing hours and the manufacturing wage, down 1.1 percent and 4 percent respectively, and government unemployment, down two-tenths of a percent.
Other indicators fared better however: employment service jobs, +2 percent; U.S. consumer sentiment, +21.1 percent; retail sales, +4.2 percent; and private service-producing employment, +1.6 percent.
Also improving were the new claims for unemployment, -8.2 percent, and benefit exhaustions, a measure of longer-term unemployment, -23.7 percent.
Lardaro will be blogging about the new labor data during the coming weeks. His discussion and charts cane be found at http://rieconomy.blogspot.com.

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