Home Economy Economic Activity Lardaro: R.I. economy expanding despite weak December

Lardaro: R.I. economy expanding despite weak December

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PBN Staff

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02/12/2024

Lardaro-1 — UNIVERSITY OF RHODE ISLAND economist and professor Leonard Lardaro said in his monthly Current Conditions Index report on Monday that Rhode Island’s economy closed 2023 in expansion range despite a weak December performance. / PBN FILE PHOTO/MICHAEL SALERNO

PROVIDENCE – Rhode Island’s economy closed 2023 in expansion range despite a weak December, University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report on Monday. The index that Lardaro publishes each month had an expansion value of 58 in December, same as November, though an improvement from

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PROVIDENCE – Rhode Island's economy closed 2023 in expansion range despite a weak December, University of Rhode Island economist and professor Leonard Lardaro said in his monthly Current Conditions Index report on Monday. The index that Lardaro publishes each month had an expansion value of 58 in December, same as November, though an improvement from 50 in December 2022. A CCI value below 50 indicates economic contraction, while a value above 50 indicates an economic expansion. Lardaro said last December was weak, even though the CCI had an expansion value of 58 with seven of the 12 economic indicators improving year over year. Retail sales barely increased by 0.02% year over year, which Lardaro said was the difference between neutral and expansion values for the CCI. Government employment was strong, rising 3% year over year, which Lardaro credits to federal money. The state’s labor force rose for the fourth consecutive month, a rarity Lardaro said, while the participation-adjusted unemployment rate was lower year over year at 5.9% U.S. consumer sentiment, total manufacturing hours and manufacturing all rose year over year in December while employment service jobs, the leading indicator of job gains, fell by 4.3% year over year. Moving forward, Lardaro said he is awaiting the revised labor market data to see if this changes how the state’s economic performance will be perceived and how state budgeting will be affected by the end of federal pandemic funds. “I hope that both the labor force and resident employment are not revised lower as was the case last year. I can’t imaging this year’s revisions will be as brutal as those of last year,” Lardaro said. “Ditto for payroll employment. Actually, I would not at all be surprised if this is revised higher, as its behavior according to the data does seem a bit inconsistent with what is happening in this state, other than what the nonsurvey based-CCI indicators show." Lardaro said the nonsurvey-based indicators paint a truly bleak picture. Single-unit permits have risen only once in the past year while declining at double-digit rates for almost every month. Benefit exhaustions, which reflect layoffs and longer-term unemployment have surged since April and new claims have only improved three of the last 12 months. “The existing data have painted a somewhat disappointing picture of our state’s economy, to say the least, although as I have pointed out on numerous occasions, aggregate numbers can be misleading, as they potentially mask a great deal of what is going on 'under the hood,' ” Lardaro said. Lardaro said that among the existing labor market revisable data, government employment has had only one yearly decline in 2023, while the state’s labor force has been improving since August. However, private service-producing employment, which reflects nongovernment, nongoods-producing employment, has performed badly, declining every month since April. Year-over-year CCI indicators in December:

Employment-services jobs decreased by 4.3%.
Government employment increased by 3%.
Labor force increased by 1.5%.
Manufacturing hours declined by 1.8%.
New unemployment claims increased by 2.7%
Private-services production employment decreased by 0.8%.
Retail sales increased by 0.02%.
Single-unit permits decreased by 10.6%.
Unemployment benefit exhaustions increased by 33.9%.
Unemployment rate was unchanged
U.S. consumer sentiment increased by 16.7%.