This is an abbreviated version of my Current Conditions Index report for April (it excludes tables and The Bottom Line). I you want to read the full version, please go to my web site: http://www.llardaro.com .
Analyzing and forecasting an economy has
always been part science and part art. In light of the situation Rhode Island
currently finds itself in, based on the likelihood that the “official” labor
market data for this state is inaccurate, I guess you can add navigating
through fact versus fiction to the above list.
Since existing labor market data
are very likely understating two CCI indicators, Private Service Producing Employment and Employment
Service Jobs, and overstating one other, the Unemployment Rate, I will
now be providing two CCI estimates each month as the likely range for the CCI. This will
continue until the flawed data disappears, hopefully next February.
So, in spite of what you continue to hear
in this state, payroll employment has not fallen for eight consecutive months.
Nor is Rhode Island close to a double-dip recession. Interestingly, though,
with that many alleged consecutive drops in employment, why haven’t those
analysts who believe the currently released labor market data actually made the
recession call? I had avoided doing that prior to the revelation of the flawed
labor market data, since the Current Conditions Index failed then, as it
continues now, to show the requisite signal for a recession: six or more
consecutive values in the contraction range of below 50.
With all of this in mind, Rhode Island
entered the second quarter of 2012 on a positive note, as its re-acceleration
from the mid-2011 doldrums continued. In spite of the fact that Current
Conditions Index values based on the faulty existing labor market data (upper values) continue
to show readings barely above stall speed, allowing for likely data revisions,
the CCI has moved into the range of 67—75 throughout this entire year. This
should not be construed as indicating that this recent acceleration is
particularly rapid. Rhode Island continues to find itself in a sluggish
recovery. It is the persistence of these higher CCI values that matters the most for now. We have
moved above stall speed. As of April, Rhode Island’s recovery reached its 26th
month.
On a year-over-year basis, four of the five
non-survey-based CCI indicators improved. Only three of the five showed
improvement on a monthly basis, though — something for us to keep an eye on. Retail
Sales increased by 1.6 percent, its eighth consecutive improvement compared
to year-earlier values. Part of this is no doubt related to the skilled Rhode
Islanders we rent out to neighboring states who bring their income home with
them from states whose jobless rates we can only fantasize about here. Clearly,
though, Retail Sales momentum is continuing. Along with this, US
Consumer Sentiment rose as well, by 9.2 percent. For both of these indicators, April
values exceeded their March levels. New home construction, based on Single-Unit
Permits, continued its roller coaster ride, rising by 7.5 percent in April
relative to last year. It too rose relative to March. New Claims for
Unemployment Insurance, a leading labor market indicator that reflects layoffs,
declined by 8.8 percent, its fifth improvement in the last six months. Finally,
Benefit Exhaustions, reflective of longer-term
unemployment, failed to improve for the first time in almost a year.
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