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Just as persons in Rhode Island finally
discovered that our state’s economy performed considerably better than the
flawed labor market data had led us to believe throughout 2012, we wake up to
the reality that the first two months of 2013 have not been as kind to our
state’s economy. During the second half of 2012, Rhode Island’s recovery
clearly strengthened, as the breadth of overall economic activity here (the
number of indicators improving) and the pace of this recovery accelerated. We
attained Current Conditions Index values of 92 twice in late 2012 and finished
the year with a pair of 83 values, as ten of the twelve CCI indicators
improved. For January of 2013, the CCI fell to 75, and in February, the
third anniversary of Rhode Island’s recovery, the CCI fell to 67, as
only eight CCI indicators improved. Happy Anniversary! At least it is still
possible to say that while the CCI values for each of the first two months this
year were somewhat discouraging relative to what we saw in the second half of
2012, both did manage to exceed year-earlier values.
This isn’t the first time I can recall
seeing less impressive performance than what we had apparently missed after
upwardly revised data were released. What a tease!
I wish I could say that this month’s
indicator performance was in some way misleading, that there is reason to
believe that Rhode Island’s economy isn’t slowing, but the data show
rather convincingly that Rhode Island’s economy has in fact slowed during the
first two months of 2013. Perhaps even worse, two critical indicators
that have been strong performers for some time now may be in the process
of reversing their trends.
The first of these is Retail Sales.
Its performance has been stellar, as its year-over-year growth rates have
exceeded 3 percent, reaching over 6 percent several times since October. It is
quite possible that the combination of the lapse of the Payroll Tax Holiday and
high gasoline prices will produce retail weakness throughout the first half of
2013. The other indicator is New Claims for Unemployment Insurance. This
is a leading indicator that reflects layoffs. On a year-over year basis it has
improved for some time now. It has, however, begun to weaken on a monthly
basis, which could eventually translate into weakness year-over-year.
Along with both of these, several of the
indicators that were supposedly declining but actually improved last year have
begun to slow as well. Growth in our state's Labor Force has moderated
since December, as has Employment Service Jobs, a leading labor market
indicator. The same is true for Private Service-Producing Employment,
which saw its growth fall below 1 percent for the first time since December. To
be fair, there was a “strange” behavior for payroll employment in February, as
it fell from January’s level, which is very likely responsible for the slowing
rates of growth for both Employment Service Jobs and Private
Service-Producing Employment. Let’s hope this doesn’t signal that the
employment data is getting “strange” again this year!
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See the full report (with tables) at: http://www.llardaro.com .
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