Interview (2/16) on Buddy Cianci's Show

This past Wednesday I spoke with Buddy Cianci on WPRO. We discussed my Current Conditions Index and a host of other topics. You can listen to this interview by following this link.

Hopefully WPRO will eventually figure out the correct spelling of my last name.

While we're at it, I located a page at WPRO that has listings for all of my interviews during the last six or so months.

Media Coverage of the December 2010 Current Conditions Index

The December Current Conditions Index (the report is given in the prior post and on my website) received coverage in local media. Here is my discussion of the index on Channel 10's Business Talk with Frank Coletta. The Providence Business News, as always, gave very nice coverage to the report as well.

Current Conditions Index: December 2010

Over the past few months, I have been keeping my fingers crossed concerning whether Rhode Island’s current recovery would continue. My greatest fears were that either this recovery would stall or worse yet, end abruptly moving us back to where we clearly don’t want to be. The December Current Conditions Index reading restored my faith on this front for now at least, as the CCI moved beyond its recent two-month stint with a contraction and a neutral reading. For December, the CCI rose to 58, back in the expansion range, as seven of twelve indicators improved compared to a year ago.

As I noted in last month’s report, Rhode Island’s recovery might even have more strength and momentum than recent reports indicate, as we will soon see the labor market data revisions going back to late 2009. If the historical pattern for these revisions holds, prior employment data should be revised (rebenchmarked) higher, which is my expectation at this point. Historically, the December labor market data is often revised, even in “normal” times. Combine this with an economy that has recently shifted into recovery mode, and I don’t exactly find myself with a great deal of confidence in the currently available data for December.

There were several very strong performances among the CCI indicators in December. Retail Sales, one of the foundations upon which Rhode Island’s recovery has been built, improved again, rising by 8.7 percent, capping a strong holiday shopping season. This indicator has now increased for ten of the past eleven months. Another part of our foundation, US Consumer Sentiment, rose for a second time after two consecutive decreases. It’s uptrend remains in effect. The most amazing story of this recovery to me continues to be strength in our state’s manufacturing sector. For December, Total Manufacturing Hours rose by 1.6 percent, powered by yet another increase in the length of the workweek. December marked the fifth consecutive improvement for this indicator, an anomaly for Rhode Island. Along with this, the Manufacturing Wage rose again, by 3.0 percent. The other portion of our state’s good producing sector, housing, improved this month. Single-Unit Permits, which reflects new home construction, rose 3.1 percent in December, but it remains at low levels.

Two other indicators improved in December. Benefit Exhaustions, which reflects long-term unemployment, fell by 13.4 percent, its tenth consecutive improvement, while our state’s Unemployment Rate declined again, from 12.7 percent last December to “only” 11.5 percent this December, partly the result of declines in our Labor Force, which fell by 0.2 percent compared to a year ago.

All of the remaining indicators failed to improve. New Claims, a leading indicator that measures layoffs, rose by 25.4 percent, partly the result of comparison to a clogged-phone period a year ago. Employment Service Jobs, another leading labor market indicator, dropped by 12.6 percent compared to a year ago. Private Service-Producing Employment fell again (-0.2%), but its rate of decline has continued to moderate. Finally, Government Employment declined by 0.3 percent in December. Expect future declines based on the absence of any future assistance from the federal government.

THE BOTTOM LINE:

Through December, the available labor market data point to a very fragile state economy. The potentially good news is that revisions to the recent data will be released soon. Typically, in the early stages of recoveries, revisions are higher, so things weren’t as bad as they had appeared to be. I expect that to be the case this time. Hopefully, some earlier CCI values might also be revised higher and things were less bleak than we thought.

December 2010 Data

The December 2010 data, the existing data at least, are given in the table below. While the Rhode Island's economy has made substantial improvement since its recession, weakness remains. The potentially good news concerns upcoming data revisions (rebenchmarking). With the release of the January employment data (later this month), we will see the revised labor market data extending back to late 2009. If history turns out to be accurate, during the initial stages of recoveries, revisions are to higher values. That doesn't say how much higher, though. I expect some upward revision to the existing data, so things weren't quite as bad as we had been led to believe. But I don't expect truly dramatic changes. We'll have to keep our fingers crossed for that.

Once the rebenchmarked labor market data have been released, I will make one or more posts discussing the changes and their significance.

Is Rhode Island's Population Really Rising?

Ever since the Census results were released, the presumption has been that Rhode Island's population is increasing, as the number of persons in the 2010 Census was higher than the number in the 2000 Census. Well, sometimes a picture says a thousand words. Below is a graph of annual population values for Rhode Island from the US Bureau of the Census (click to enlarge this).

Is our state's population really rising? Answering something as simple as this actually has one item that needs to be specified: Rising relative to when? If we compare the 2010 Census to the 2000 Census, then yes, Rhode Island's population has indeed risen. But we ranked #49 out of the 50 states for this change, by the way.

A preferable way to view population change is to examine what has been happening each year for the last several years. Sadly for Rhode Island, annual population has fallen every year since July of 2004! Rhode Island was the only state with the dubious distinction of having such a long streak of population declines. So, looking at population change in a more relevant context than it has recently been viewed here, Rhode Island's population is falling.

Stay tuned! I will have more about this in coming posts.

Rhode Island Employment by Sector at the end of 2010

The table below (click to enlarge) shows employment by sector as of December, 2010 for Rhode Island. I have sorted these from largest to smallest sector. Their values for November of 2010 and December of 2009 are also included. Some persons combine "Accommodation & Food Services" and "Arts, Entertainment & Recreation" into a single category. That combined category would have a rank of #5 as of December, 2010.

From the "top 6," two things should be apparent. First, RI is led by sectors that don't exactly grow at explosive rates during recoveries. Second, in the "top 6" there are several groups that are very cyclically sensitive -- mainly Retail Trade and Manufacturing. While neither of these generated terribly large job gains during the run-up to "The Great Recession," both were able to generate significant declines when things here began to weaken.

How much did employment in each of these sectors change from December of 2009? The next table (click to enlarge) shows this, ranking by the size of the employment change.

Any wonder why RI's economic performance during the present recovery that began in June of 2010 hasn't exactly been stellar?

Let me end on a potentially positive note. I believe very strongly that when the RI DLT releases the revised labor market data for the past two years (in late February), the values in the above tables will be revised higher. How much higher, I can't say at the present time. And, I don't expect the rankings by sector size to change. I truly hope (and expect) that there will be more positive change sectors, whose changes that will not be as anemic as what the available data show today.

Media Coverage of the November 2010 Current Conditions Index

The November Current Conditions Index (the report is given in the prior post and on my website) received coverage in local media. Here is my discussion of the index on Channel 10's Business Talk with Frank Coletta. The Providence Business News, as always, gave very nice coverage to the report as well.

Current Conditions Index: November 2010

After sputtering last month, Rhode Island’s recovery appears to be sustaining itself, although not by very much. In October, the Current Conditions Index fell to 42, a contraction value, as only five of the twelve CCI indicators improved. For November, while there wasn’t great news, there was reassuring news, nonetheless. The November CCI rose to 50, its neutral value, as six of twelve indicators improved. As November is a month where substantial labor market data revisions often occur with data rebenchmarking (we will see this in February), perhaps the last few months of CCI values will be revised higher with the new data. We will have to wait and see. But for November, at least, several CCI indicators had very easy “comps” a year ago, so the index’s rise from October to November might not indicate that we are “out of the woods” yet, in terms of sustaining this recovery.

Retail Sales, one of the foundations upon which Rhode Island’s recovery has been built, improved again in November. It has now increased for nine of the past ten months, reflecting a strong uptrend. Another part of our foundation,Consumer Sentiment, rose after two consecutive decreases. For November, US Consumer Sentiment rose by 6.8 percent. It too remains in an uptrend, having risen for all but one month over the last year. For November, we again witnessed strength in our state’s manufacturing sector. Total Manufacturing Hours rose by 1.1 percent, powered by yet another sharp increase in the length of the workweek. November was the fifth consecutive improvement in this indicator, an anomaly for Rhode Island. Along with this, the Manufacturing Wage rose again, by 3.7 percent.

Two other indicators improved in November. Benefit Exhaustions, which reflects long-term unemployment, fell sharply, dropping by 24.8 percent, its ninth consecutive improvement. Finally, our state’s Unemployment Rate declined again, from 12.5 percent last November to “only” 11.6 percent this November, partly the result of declines in our Labor Force, which fell by 0.1 percent compared to a year ago. Over the month, our Unemployment Rate rose (by 0.2), related in part to a monthly increase in the Labor Force.

The remaining indicators failed to improve. Single-Unit Permits, which reflects new home construction, fell sharply again in November, by 45.7 percent, to an annualized level of only 610 units. New Claims, a leading indicator that measures layoffs, rose at a double-digit rate (by 15.7 percent). It is not clear whether this indicator has begun a prolonged period of increase (non-improvement). Let’s hope it hasn’t. Employment Service Jobs, another leading labor market indicator, fell by 12.5 percent compared to a year ago. Its value has fallen below its recent plateau, another disturbing development. Private Service-Producing Employment fell again (-0.5%). Its rate of decline continues to moderate. Finally, Government Employment declined by 0.2 percent in November, fueled largely by a decrease in local non-education employment. The absence of any future assistance from the federal government should cause its future deterioration.

THE BOTTOM LINE:

Rhode Island's economic recovery remains slow and somewhat tenuous based on existing data. Soon we will see the revisions to the existing labor market data. Hopefully, these will indicate less depressing employment picture. They might even produce some upward CCI revisions. The good news, though, is that things really can't be worse here than they have been. Maybe this recovery isn't as tenuous as existing data seem to indicate.

A Look Back: The Current Conditions Index Since 2006

Sometimes a picture is worth a thousand words, or so the saying goes. The last several years have been very bleak for Rhode Island. Our state weakened then fell into recession well before most other states. At this point, Rhode Island is still in a recovery, or at least I think so, but I will continue to keep my fingers crossed anyway. The Current Conditions Index (CCI) report that will be released next week (and posted here and on my web site) will show exactly what I am referring to.

So, now for the picture. Below is a chart of the CCI since 2006 (click to enlarge). I don't think words do this justice, but I will allow you to judge for yourself.

November Economic Data for Rhode Island

The November data for Rhode Island were somewhat disappointing. The only potential bright spot is that at this time of the year, labor market data have often been far from the actual values, something that ends up being corrected when the data that are later revised (in February with the release of the rebenchmarked labor market data from 2009 forward).

Below is a table of November's actual data (click to enlarge).