Lardaro: Feb. growth ‘tepid at best’

EIGHT OF THE 12 economic indicators that comprise the Current Conditions Index showed improvement, University of Rhode Island economist Leonard Lardaro said. / COURTESY LEONARD LARDARO
EIGHT OF THE 12 economic indicators that comprise the Current Conditions Index showed improvement, University of Rhode Island economist Leonard Lardaro said. / COURTESY LEONARD LARDARO

PROVIDENCE – Rhode Island’s economic growth in February was “tepid at best,” according to Leonard Lardaro, a University of Rhode Island economist.
Lardaro’s Current Conditions Index, released Monday, was 67, an improvement from January’s 58, but the same compared with February 2015.
CCI measurements higher than 50 suggest economic growth; a value below 50 indicates contraction.
The monthly value reflects 12 broad-based indicators of economic activity, including government employment, retail sales and unemployment rate.
“The good news, as far as good news here goes, is that this CCI value this month matches the second-highest value from last year, a number we saw for eight of the 12 months in 2015,” Lardaro wrote.

Lardaro said although eight of the 12 indicators showed improvement, all but seven were “tepid at best.” The exception was single-unit permits, for new home construction, which grew 185.7 percent.
Other areas that saw growth were: retail sales, 2.3 percent; employment service jobs, including temporary employment, 1.1 percent; private service-producing employment, 1.7 percent; and total manufacturing hours, a measure of manufacturing sector strength, at 1.5 percent. Other positives included declines in benefit exhaustions, which reflects longer-term unemployment, by 5 percent relative to last year, and new unemployment claims, which fell 7.1 percent over the year. The unemployment rate also dropped 1 percentage point.
Lardaro noted negatives, such as the labor force falling 0.5 percent, government employment dropping 0.8 percent, U.S. consumer sentiment decreasing 3.8 percent and manufacturing wage falling 2.4 percent.
“Our negatives remain all too present as they continue to blunt the positive momentum that exists here. … While we had been led to believe this indicator was in a well-defined uptrend, the revised data show that the well-defined trend is actually lower. Worse yet, that downtrend has been in place for quite some time now. The February decline of 0.5 percent in our labor force was its 21st year-over-year decline,” Lardaro wrote.
Lardaro said that as national growth slows, “so too does Rhode Island.”

“Unfortunately, it will be necessary for us to institute many structural changes before we can better insulate ourselves from weakening economic growth,” Lardaro said.

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