Tuesday, August 14, 2012
Current Conditions Index: June 2012
Below is an abbreviated version of the June Current Conditions Index report. The full report (in PDF format) along with tables and historical reports is available on my web site: http://www.llardaro.com .
Rhode Island ended the second quarter on a rather mixed note. While the “official” labor market data continue to depict an economy that is not only falling off the proverbial “cliff,” but that has entered into a double-dip recession, a news release from the Governor’s office, based on analysis from the Department of Labor and Training, stated that employment here is not actually falling, as the DLT monthly data continue to show, but has actually been increasing for some time now (the release covered the first quarter of 2012). Apparently, this came as a big surprise to much of this state’s media, even though the errors with the “official” labor market data were publicly acknowledged by the DLT months ago and I have been discussing all of this regularly in my Current Conditions Index reports. Recall, this data divergence caused me to begin providing two CCI values each month — one based on the “official” data and the other using my simulated labor market values.
What do we actually know overall about Rhode Island’s current economic performance? Rhode Island’s economy continues to be in a tepid recovery that began in February of 2010, now 28 months old. While economic reality here is far better than what the “official” data show, the non-flawed data indicate that this recovery displayed some loss of momentum during the second quarter that will likely continue moving forward. It is important to note, however, that even using the flawed “official” labor market data, the Current Conditions Index never gave a recession signal. Furthermore, based on my simulations (the other CCI values listed), Rhode Island’s economy has been able to sustain some of the momentum it gained during the second half of 2011, although this that momentum bas begun to erode based on the performances of several key individual indicators.
According to my econometric models, there were three noteworthy but problematic indicator changes in June. First, payroll employment, which has been rising for some time now on a yearly basis (albeit at declining rates) actually declined. Second, this employment weakness translated into an uptick in Rhode Island’s monthly Unemployment Rate from my projection of a 10.7 percent rate in May to 10.8 percent in June. Finally, the rate of growth in a very important labor market indicator, Private Service-Producing Employment, has slowed dramatically over the past two months, barely increasing in June.
See the full report at: http://www.llardaro.com .