PROVIDENCE – The Rhode Island economy was still contracting year over year in February but is headed in the right direction, especially in the retail sector, according to University of Rhode Island economist Leonard Lardaro.
The annual Current Conditions Index for Rhode Island declined to 17 from a value of 67 one year prior. A value above 50 indicates expansion, while a value below 50 indicates contraction.
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Year over year, just two of the 12 indicators that comprise the CCI improved, retail sales and the manufacturing wage. All other indicators worsened over the year.
Despite the year over year economic contraction, however, the state did see improvement month to month. Seven of the indicators in the index showing signs of improvement from January. The monthly CCI value was 58, indicating expansion, Lardaro said.
“The February CCI was 17, a horrific performance, but it is the last time we will be comparing it to the pre-pandemic economy,” said Lardaro. “We can look forward to a statistical quirk elevating upcoming CCI values.”
Lardaro explained that, “Statistically, the combination of weaker comparison periods and improvements occurring as we return toward where we once were will generate the higher CCI values.”
“Rhode Island has done painfully little to improve its business climate, opting instead to once again hide behind misleading unemployment rate figures, as if that were a substitute for reinventing our economy,” added Lardaro. But he said he is “encouraged by Gov. [Daniel J.] McKee’s stated intention to emphasize small business, and better yet to have the R.I. Commerce Corp. adopt more of that emphasis.”
Lardaro said, “There is good news coming, based on a statistical quirk relating to the periods we will be comparing to, good news concerning the widespread vaccination success here and the reopening of parts of our state’s economy that have largely been shut down.”
Year over year CCI indicator performance in February:
- Government employment declined 5.5%
- U.S. consumer sentiment declined 23.9%
- Single-unit permits declined 7.4%
- Retail sales increased 13.6%
- Employment services jobs declined 8.3%
- Private service production employment declined 10.7%
- Total manufacturing hours declined 6.4%
- Manufacturing wage increased 7.3%
- Labor force declined 4.1%
- Benefit exhaustions increased 308.1%
- New claims increased 206.5%
- The unemployment rate increased 3.3 percentage points
Lardaro noted that “the economy appears to have returned to where we once were. Sadly, this same phenomenon occurs in the early stages of recoveries, where indicator improvements occur largely because things literally couldn’t get much worse than they were.”
