Lardaro: February snow failed to completely halt economic momentum

FEBRUARY'S CURRENT Conditions Index showed that February snowstorms disrupted, but did not entirely halt the economic momentum. Retail sales increased 5 percent year over year, while single-unit permits decreased 34.2 percent. / COURTESY LEONARD LARDARO
FEBRUARY'S CURRENT Conditions Index showed that February snowstorms disrupted, but did not entirely halt the economic momentum. Retail sales increased 5 percent year over year, while single-unit permits decreased 34.2 percent. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – The impact of major snowstorms in Rhode Island in February distorted but did not completely disrupt economic momentum here, according to Leonard Lardaro, an economist with the University of Rhode Island.
His Current Conditions Index, released Monday, measures economic momentum using 12 key indicators. Indices higher than 50 suggest economic growth, while a value below 50 indicates contraction.
Lardaro provided two measurements Monday – 58, when the impact of the storms on single-unit building permits are factored in – but 67 if that is accounted for as a distortion.
Calling the economic performance “mediocre” and “tepid” overall, the drop-off in building performance activity was striking, but countered by improvements in retail sales, up 4 percent a month since September, and U.S. Consumer Sentiment, up 17.5 percent and boosted by low energy prices, Lardaro said.
Single-unit permits, always a volatile indicator, declined 34.2 percent compared with February of last year, as only 17 permits were approved in the state in February, producing an annualized value of only 448 units, he said.
While that almost matches the recessionary low of early 2009, new home construction today is stronger, so, allowing for the weather-related data, a CCI of 67 can be construed as more accurate, he noted. (The CCI was 67 last January and February.)
The good news is that the weather did not adversely impact other measures, he said. New claims for unemployment fell by 15.4 percent in February, sustaining a downward trend, while total manufacturing hours increased, albeit by a negligible one-tenth of a percent.
Also improving were private service-producing employment, which increased 1 percent, and benefit exhaustions, which fell by 29.6 percent compared with a year ago. The unemployment rate also fell 2.1 percent to 6.3 percent.
However, the manufacturing wage dropped 4 percent and government employment declined by half a percent. Labor force continued a prolonged, two-year downward trend, dropping by 1 percent year over year.
“While weather adversely affected February’s economic performance,” Lardaro observed, “a substantial amount of weakness continues to exist nonetheless, which is limiting our upside economic momentum.”

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