PROVIDENCE – There are growing concerns that the state’s economy is slowing, even though Rhode Island marked its 18th consecutive month of economic expansion in December, University of Rhode Island economist and professor Leonard Lardaro said Monday.
The Current Conditions Index that Lardaro publishes each month had a value of 67 in December, same as November and down from 75 in October. A CCI value above 50 indicates expansion, while a value below 50 indicates contraction.
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Eight of 12 of the economic indicators Lardaro uses to calculate his index showed improvement from the same period a year ago. However, Lardaro said he is concerned that a number of indicators, specifically leading indicators, new claims for unemployment benefits, consumer sentiment, single-unit permits and employment service jobs and retail sales, are continuing to falter.
“For the second consecutive month, all four of the indicators that failed to improve were leading economic indicators, those whose current values foreshadow what we can expect to observe in the future,” Lardaro said. “This calls into question how rapid the pace of economic growth will be through 2023. In addition to this, monthly values of many of the CCI indicators are not improving, resulting in the Monthly Current Conditions Index remaining stuck in negative territory.
“Sadly, most of those are concurrent indicators, informing us of where we are at present, not providing information on future direction,” Lardaro said.
New unemployment claims in December rose sharply for the second time since the height of the pandemic, while single-unit permits dramatically weakened, falling more than 40%, Lardaro said. Employment-service jobs have also fallen for three consecutive months as its rate of decline increased, he added.
Retail sales, which Lardaro calls the “star performer” of his CCI Index, has been declining for several months while total manufacturing hours barely managed to rise in December.
Lardaro said there is some hope, though. Data revisions for employment-service jobs and total manufacturing jobs could be readjusted in the state’s favor.
“If Rhode Island data are revised, as was the case with national data, things might look a bit rosier and my concerns would diminish,” Lardaro said. “Should we see downward data revisions, then all bets are off.”
Year-over-year CCI indicator performance in December:
- Government employment increased 1.3%
- U.S. consumer sentiment declined 15.5%
- Single-unit permits declined 43.2%
- Retail sales rose 9.2%
- Employment-services jobs declined 8%
- Private-services production employment rose 1%
- Total manufacturing hours increased 0.7%
- The state’s manufacturing wage rose 6.2%
- Unemployment benefit exhaustions declined by 27.5%
- New unemployment insurance claims increased 11.3%
- The state labor force increased 0.8%
- Unemployment rate declined 1%.
