SOUTH KINGSTOWN – There should be a sense of cautious optimism around Rhode Island’s strong October economic performance pending federal budget cut negotiations, according to University of Rhode Island economist Leonard Lardaro’s October Current Conditions Index.
“Our ability to sustain this momentum will largely be determined by the outcome of the ‘fiscal cliff’ negotiations,” said Lardaro. “Should the US fall over the dreaded cliff and remain there for some time, then Rhode Island, like almost every other state will inevitably de drawn into the abyss of a national recession.”
Lardaro goes on to say he doesn’t believe the country will go over the cliff or stay there for long even if it does, so there could be reason to celebrate what he called Rhode Island’s “strongest” economic performance in a “long, long time.”
In fact, he said, since fiscal cliff worries have already started to negatively affect business, a higher economic measurement for October holds even more significance.
In October, nine of the 12 measured metrics in the CCI showed improvement with the largest changes coming in a 36.1 percent increase in the U.S. consumer sentiment, a 27.5 percent increase in single-use permits, and a 15.1 percent decrease in benefit exhaustions, which measures longer-term unemployment.
The three sectors that showed a downslide were a 1.8 percent loss in government employment, a 2.3 percent loss in employment service jobs, and a .6 percent loss in private, service-producing employment.
The CCI puts a figure to the state’s economic performance over the dozen metrics. A number greater than 50 indicates progress while a value less than 50 signals setbacks.
Lardaro has been using two measurement numbers for several months to address conflicting data on the state’s unemployment rate form the R.I. Department of Labor and Training that he says is flawed and makes the state’s economic woes seem worse than they are.
For October, using his adjusted employment numbers, Lardaro issued a CCI of 83, up from 58 in September. Using the state’s official data, the CCI would be 75, up from 50 in September.
In either scenario, the CCI is the highest yet this year.
“October’s strong performance means that it is more likely that we should be moving away from the weaker monthly performances of late,” Lardaro said. “Rhode Island’s economy has shifted into a higher gear for now. We now await what the fiscal cliff holds for us.”
In October, these metrics also showed improvement: retail sales up 6.4 percent; total manufacturing hours up 3.2 percent; manufacturing wage up 5.6 percent; labor force up 0.1 percent; new claims down 9.7 percent; and unemployment rate down 0.8 percent.