A blog devoted to providing my perspectives on the Rhode Island economy that utilizes discussion, tables, graphs, and hyperlinks to illustrate key points and where I come a lot closer to saying what I really think than what I say to the general media. A DISCLAIMER: Everything in and on this Blog is solely attributable to me and bears no connection whatever to either the University of Rhode Island overall or the URI economics department.
Below is an abbreviated version of the August 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 .
Up until last month, it appeared that
Rhode Island’s economy had already seen the long awaited acceleration in
activity come and go. Clearly, we improved at the end of 2011, which provided
us with momentum through the first quarter of 2012. Then, this economic momentum began to slow, placing us
in the situation with higher levels of many indicators, but their overall rate of growth was decelerating, a
possibility that could potentially move our state’s economy to stall speed at
some point in the future. But the August results show some real strength and
quite possibly a re-acceleration in Rhode Island’s economic momentum moving
forward. So, any discussion of the potential for reaching “stall speed” should
be put on the backburner at this point.
For August, eight of the twelve CCI
indicators showed improvement, giving a monthly CCI value of 67 using the
“official” data that we know is flawed. Based on my simulations, the more
correct CCI value for August is 75 (or possibly 83, but that’s too close a call).
What I find most encouraging for August is the fact that all of the non-survey
based indicators, which don’t suffer from the flaws currently plaguing most of
the labor market data, showed significant improvement, something that doesn’t
occur very often enough here.
Ironically, the “official” labor market
data continue to show an economy that fell off a cliff about a year ago, with
payroll employment now declining on a year-over-year basis for twelve of the
last thirteen months. Let me renew my challenge to anyone using that data to
conclude anything other than the existence of a double-dip recession here.
Ironically, though, the “official” labor market data, which typically become
more negative starting around this time of year are becoming less so, indicating
that the measurement error might now have changed direction. Go figure!
So, the potential
re-acceleration reflected in the August data may be showing that Rhode Island’s
economy is gaining some momentum just as the US economy is. For both, this is
occurring as Europe remains mired in recession and Asian growth has slowed.
Monetary policy lags (6-12 months) preclude recent monetary changes by the Fed
and ECB from directly causing this momentum, other than positively influencing
confidence and investor appetite for risk. -------------------------------------------- See the full report at: http://www.llardaro.com .