PROVIDENCE – Rhode Island’s economy expanded for the 10th consecutive month in January indicating a more rapid and stronger pandemic recovery than anticipated, but there is still concern about employment levels, University of Rhode Island economist Leonard Lardaro said on Wednesday.
The Rhode Island current conditions index he produces each month had a value of 75 in January, a continued expansion, but a step down from the final three months of 2021 when the value sat at 92. It is still a major improvement from a value of 17 a year ago, he said.
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A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
Nine of twelve indicators that comprise the index improved year over year.
Lardaro said Rhode Island’s economic performance overall and its bounce back from the pandemic has been far better than expected.
“Our rising tax revenues and budget surpluses along with the recent Census population surprise were not flukes,” he said. “The next question is how long it will take for our employment levels to return to their pre-pandemic levels. It is in this area that I am concerned, as our elected officials have done painfully little to eliminate the host of structural issues that are continually cited in 50-state business climate comparisons.”
Lardaro said the state has money to address its structural issues, but does it have the inclination to do so? “Sadly, the federal money has provided a sugar high where our elected officials are busy spending that money as though it can be meaningfully done absent the need for simultaneous structural reform,” he said.
“As everyone pays an inordinate amount of attention to our state’s unemployment rate, there is significant news there too,” noted Lardaro. “While this metric surged to 18% at the height of the pandemic, it fell all the way back down to 4.2% in January, and in a possible anomaly for Rhode Island, on a yearly basis this has occurred with an increasing labor force since March. However, on a monthly basis, things are less sanguine, due to a string of declines that began in August.”
Lardaro said the January value is well below the string of very high and two perfect scores last year, but there were several obvious strengths.
“Of the five leading indicators in the CCI, only three improved, even with relatively easy comps last January,” he said. “Notable among those was employment service jobs, a category that includes temps. January was its first decline since last August. New claims, the most timely measure of layoffs, fell by almost 50% and has improved every month since June.”
Lardaro said there has been sustained momentum in the state’s manufacturing sector, as total manufacturing hours, a proxy for manufacturing output, rose at a double-digit level, +13.2%, its 11th consecutive increase with both the workweek and employment rising once again. “Finally, both single-unit permits for new home construction and U.S. consumer sentiment failed to improve,” he said.
Year over year CCI indicator performance in January:
- Government employment increased 1.4%
- U.S. consumer sentiment declined 15.2%
- Single-unit permits declined 4.5%
- Retail sales rose 16.3%
- Employment services jobs decreased 1.2%
- Private services production employment rose 4.4%
- Total manufacturing hours rose 13.2%
- The state’s manufacturing wage rose 13.5%
- The state labor force grew 0.6%
- Benefit exhaustions declined 64.3%
- New claims declined 49.8%
- The state’s unemployment rate declined 2.1 percentage points
Rhode Island’s month-to-month CCI value was weak, said Lardaro.
“Another weak performance by the monthly CCI continues a trend that points to an uneven recovery from this point forward, which is consistent with the decline in the January CCI value relative to December,” he said.
