Spring might mean growth for flowers and plants, but according to the Current Conditions Index, the economy isn’t so much in a spurt as it is a slump.
Leonard Lardaro, a professor at the University of Rhode Island and creator of the index, said the Ocean State ended the first quarter on a “sour note” with the index at 58 at the end of March.
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The index measures the present state of the Rhode Island economy by weighing 12 factors, including retail sales, government employment and help-wanted ads.
“The growth rate in Rhode Island is not exactly spectacular,” Lardaro said. Mirroring the performance of the nation, Rhode Island hit a “soft patch” in March, Lardaro said.
Government employment fell 0.2 percent in March, its ninth such decline in the last 12 months.
The slip, Lardaro said, is due to budget cuts at the state and local levels.
“There is a lot of fiscal pressure at the state and local levels,” Lardaro said. “I expect that to continue because I don’t see budget pressure decreasing too much.”
Statewide labor demand, based on “help-wanted” advertising, fell off again in March. In January, the growth rate of that indicator was 6.8 percent; February’s was 3.3 percent and in March it was just 2.4 percent.
“That’s still not bad, but it was much stronger in the past few months,” Lardaro said. Despite the apparently slow labor demand, the index showed that private service-producing employment increased by 2 percent in March. Overall job growth, however, “is not where it needs to be,” Lardaro said.
“While we do have a decent number of job gains, there’s always job loss – the net change hasn’t been spectacular,” he said.
The current trend in Rhode Island shows that there are a lot of economy-sustaining jobs – like tourism, health services and nonprofits – but not enough new types of job growth to move the economy forward at a consistent rate, Lardaro said.
“There aren’t a tremendous amount of things moving us forward,” he added.
Unemployment indicators improved for the first time, Lardaro said. Layoffs, which are measured in new claims for unemployment insurance, fell by 7.5 percent in March – making for one of the strongest performances in the last year. The index shows that benefit exhaustions, which measure long-term unemployment, fell by 26.2 percent.
The state’s labor force saw its first year-over-year rise since December 2003, creeping up 0.2 percent. The unemployment rate fell 16.7 percent compared to last March, but was slightly higher in value compared to February 2005.
Retail sales fell by 2 percent and consumer sentiment 3 percent, Lardaro said, a performance that is on pace with national numbers. An early Easter holiday may have contributed to the poor retail performance, Lardaro said.
In the final quarter of 2004, Rhode Island posted the worst personal income growth in the country.
“It was very unexpected,” Lardaro said. “It shows our growth in personal income has been above the nation … then last year, it was the last in the country.”
Also “disturbing” was a 6.7 percent drop in durable goods manufacturing income in that same quarter, Lardaro said.
Manufacturing man-hours were down 6 percent compared to last March. Manufacturing wage growth slowed to 0.1 percent, its slowest growth in over a year. The average hourly wage in the field stuck at $13.01.
New home construction, which Lardaro measures based on the number of single-unit permits purchased, fell 25 percent in March. The number had declined by 18 percent or more five times since September.
“We’re as heavily dependent as ever on the national economy and that appears to be picking up again,” Lardaro said. “I expect Rhode Island to go forward, but our growth rates aren’t going to be with the rest of the nation.”
