PROVIDENCE – The Rhode Island economy ended 2021 on a high note, as it continued to see expansion for the ninth consecutive month in December, with Current Conditions Index registering improvements on all but one indicator versus a year ago, said University of Rhode Island economist Leonard Lardaro on Thursday.
Most of the economic improvements are attributable to the state being aided by federal COVID-19 relief funding, he said.
The state’s economic recovery from the COVID-19 pandemic has seen “many areas come back strongly,” ending the year with an impressive CCI registered value of 92, compared to a value of 25 a year ago, he said.
The CCI’s registered value of 92 in Dec. 2021, follows three straight months of a value of 83 indicating an expanding economy. The highest value in 2021 was a registered value of 100 in July, as the economy has seen steady expansion since April when the value was 75. In March the value registered was 42.
A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
Lardaro said that what happens to the labor force and unemployment rate are of particular interest, since there has been a great deal of self-employment, which raises the resident employment and distorts the existing data.
“Will all of this somehow paint a different picture? We will have to wait to see,” he said, noting that CCI values should not be expected to be as high as 2022 unfolds.
“The good news is that this uncertainty will be removed next month when the revised labor market data is released,” said Lardaro. “While I expect a number of employment changes to be upward revisions, there is no way to be certain at this time. It is not inconceivable that the early pandemic months will be revised lower but the more recent months shown to contain higher employment.”
Retail sales were the star performer in December 2021, increasing 12 times, ten of which were by double-digits. The manufacturing wage also rose 12 times, but its values are related to compositional monthly changes in the various sub categories for that industry.
Total manufacturing hours was next with 10 improvements, most of which were double-digit increases occurring since April. Lardaro noted it was impressive that both the workweek and employment rose throughout this period, reflecting manufacturing strength during some of the periods when the service sector weakened.
Several indicators improved nine times, including private service providing employment, the unemployment rate, new claims, and singe-unit permits, whose momentum clearly faded in the later parts of the year.
Benefit exhaustions rose eight times as did the labor force, which began rising relative to a year ago in May. Lardaro asked in his report “Will its increases be reversed as so often has happened in Rhode Island?
Government employment rose by five times, ending the year several thousand higher than it began the year after it resumed an upward trend starting in July.
“The worst performer was U.S. consumer sentiment, which rose only four times, April through July, before returning to deteriorating values,” said Lardaro. “The combination of weak sentiment and very strong retail sales is a very atypical combination.”
All of this contrasts greatly with the picture that has been painted by weak performances of the Monthly CCI, he said. Since July, its values have been disappointing.
“How will the upcoming labor market revisions alter this? Possibly a great deal as there may well be a smoother set of monthly data changes in the revised data compared to those that exist with the current data,” said Lardaro.
“At any rate, I remain confident that Rhode Island’s economy will continue to move forward, unevenly, powered far too much by the sugar high of massive federal funds,” he said.
Year-over-year CCI indicator performance in December:
- Government employment increased 4.9%.
- U.S. consumer sentiment decreased 12.8%.
- Single-unit permits increased 0.1%.
- Retail sales increased 9.9%.
- Employment services jobs increased 1.1%.
- Private service production employment increased 6.2%.
- Total manufacturing hours increased 14.1%.
- Manufacturing wage increased 9.1%.
- Labor force increased 2.5%.
- Benefit exhaustions declined 77.6%.
- New claims declined 78.8%.
- The unemployment rate declined 3.1 percentage points.
Cassius Shuman is a PBN staff writer. Contact him at Shuman@PBN.com. You may also follow him on Twitter @CassiusShuman.
