Lardaro: R.I. economy slowing, revisions show smaller labor force

JANUARY'S CURRENT CONDITIONS INDEX reading of 58 indicates forward momentum in Rhode Island's economy, but revisions for 2015 showed that employment figures were too optimistic initially. / COURTESY LEONARD LARDARO
JANUARY'S CURRENT CONDITIONS INDEX reading of 58 indicates forward momentum in Rhode Island's economy, but revisions for 2015 showed that employment figures were too optimistic initially. / COURTESY LEONARD LARDARO

SOUTH KINGSTOWN – Rhode Island’s economic momentum not only slowed this January compared with last year, it had been slowing during 2015 more than originally thought, according to University of Rhode Island economist Leonard Lardaro.

That’s the insight from the January reading of 58 for Lardaro’s Current Conditions Index, released Monday. The monthly value reflects 12 broad-based indicators of economic activity. CCI measurements higher than 50 suggest economic growth; a value below 50 indicates contraction.

Following revisions based on R.I. Department of Labor and Training and U.S. Bureau of Labor Statistics data, Lardaro reports that the CCI value in December 2015 has been revised to 50 from his previous report of 58, so January’s value of 58 is an improvement when compared with December. However, CCI values were revised downward every month in 2015 since June, even though they remained stable in March and May, and were revised upward in earlier months to 67.

“It’s just a bizarre report,” he said. “We’ve got a lot of work to do here. News flash: We’re slowing down. That’s inescapable if you look at the data.”

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While data had seemed to indicate the labor force – one of the 12 key indicators – was improving year over year, Lardaro writes, revisions show consistent declines during the second half of 2015.

“That tells us that our unemployment rate [of 5.3 percent] continues to decline for all the wrong reasons: people dropping out of the labor force who are unemployed,” he said. “If you are unemployed and stop looking for work you’re not counted in the labor force and therefore you don’t show up in the unemployment numbers, so we have more of that than we’d like to have.”

There is some good news to be had in the January report, however, in terms of growth in the goods-producing sector, Lardaro noted.

January’s rising CCI of 58 (over December) shows that four of the five leading indicators improved. Total manufacturing hours rose 1.1 percent; single-use permits, reflecting new home construction, rose 34.6 percent; employment service jobs, which include temporary employment, increased 2.1 percent; and new claims for unemployment dropped 8.7 percent.

Other positive momentum was evident in private service-producing employment, which rose eight-tenths of a percent; benefit exhaustions, which declined 21.7 percent, and the unemployment rate, which dropped 1.2 percent year over year.

Declines were reflected in U.S. consumer Sentiment, -6.1 percent; government employment, -0.7 percent; retail sales, -0.9 percent, and the size of the labor force, -0.5 percent.

“Employment numbers nationally are doing great,” Lardaro added. “We’re not. … Let’s hope the national economy boosts our momentum. Soon!”

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  1. “SOUTH KINGSTOWN – Rhode Island’s economic momentum not only slowed this January compared with last year, it had been slowing during 2015 more than originally thought, according to URI economist Leonard Lardaro.”

    # # #

    With the pending state tourism re-branding tourism effort, we are on the verge of a economic boost opportunity the likes of which we haven’t seen recently. This promotional opportunity will allow us to greatly highlight our strengths specifically encompassing tourism, hospitality, arts & entertainment.

    And yes, I know the argument that this industry creates low wage jobs. Yes, thankfully it does that well (and it’s also the industry most likely to hire folks up from hunger, homelessness & poverty). All while creating huge opportunity to advance skills and trickle stimulus up into the economy. Just ask any upper level hotel manager or head chef, or the HVAC repair company working on the roof.

    I’m proposing we be supremely focused on economic development which helps business flourish and allow more taxes to flow into the system. My colleagues and I have some specific plans to initiate a public sector / public supported campaign to generate additional revenue to help improve the local economy. Please review the open letter to the state and business community pinned to the top of this Facebook page. Your constructive input is welcome:
    https://www.facebook.com/rhodeislandfirst/
    #RIFIRST