Recently, a press release by the governor’s office, which was based on calculations by the R.I. Department of Labor and Training, stated that employment here is not doing as badly as had previously been thought. Instead of employment continuing to decline on a year-over-year basis, as the “official” DLT data have been indicating for quite some time now, we were informed that employment here has actually been rising for some time.
I found this “event” along with this state’s reaction to this information to be truly mind-boggling, since the DLT stated several months ago, prior to the most recent Revenue Estimating Conference, that the “official” data were behaving in this way, showing a series of declines when the revised data indicate exactly the opposite.
If one were to look at the “official” data since the most recent re-benchmarking in February, a depressing picture of an economy essentially falling off a cliff, moving ever closer to a double-dip recession, emerges.
On my blog, I had posted numerous graphs with discussions of just how bad things here were based on this “official” data. In my February Current Conditions Index report I noted all of this, stating that it was no longer possible to rule out the possibility that Rhode Island had indeed entered a dreaded double-dip recession.
Shortly thereafter, I was informed by the DLT that revised data they had recently generated showed a very different picture – one of rising, not declining, employment. Divergences like this have occurred in past years, when the month-to-month data, which are derived from a relatively small sample of 1,600 businesses, provide a very different picture than the data based on the Establishment Survey of more than 30,000 employers.
Historically, though, such divergences had always occurred during the last three months of the year. On three occasions, I generated econometric predictions that employment, when revised, would show increases over those periods, not the declines indicated by the monthly data. Happily, I was proven correct on all three of these occasions.
This caused me to have to rethink not only how I would need to present my monthly Current Conditions Index results but the basis of public perception here as well. I opted to provide two monthly numbers, one based on the “official” data and the other which used my projections. Even as I did this over the past several months, I was astonished by how oblivious the local media remained, as the vast majority opted to stick with the “official” data that both I and the DLT had stated publicly were flawed.