SOUTH KINGSTOWN – Although the Rhode Island economy remained in recovery in September, the pace of recovery tapered off after a strong August, forcing Rhode Islanders to worry which way the state’s economic momentum will move as the United States moves closer to the end of the year, according to University of Rhode Island economist Leonard Lardaro’s September Current Conditions Index.
“On average, underlying strength has been maintained, but during the past six months a frustrating pattern emerged, during which faster-growth months are followed by slower growth the next month,” said Lardaro. “The issue now shifts to which way the state’s momentum will move as the nation comes ever closer to the end of the year and the potential threat of the United States falling off the ‘fiscal cliff’.”
In September, the Current Conditions Index reported, six of 12 measured metrics showed improvement, reaffirming Lardaro’s stance that Rhode Island continues its 31-month recovery, albeit more slowly than in August.
The CCI tracks Rhode Island’s economic performance over a 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 from the R.I. Department of Labor and Training that he says is flawed and paints a darker picture for the state than really exists.
Thus, for September, using his adjusted employment numbers, Lardaro issued a CCI of 58, down from 75 in August. Using the state’s official data, the CCI came in at 50, down from 67 in August.
“In spite of the uneven pace of overall economic activity here during the past six months, on average, reasonably strong momentum has been sustained, no matter what the ‘official’ labor market data continue to show,” said Lardaro, referring to the DLT data. “The issue now shifts to which way our momentum will move as we come ever closer to the end of this year and the potential threat of the U.S. falling off the fiscal cliff.”
“One thing is certain,” added Lardaro. “Our state’s government has no plan whatsoever for dealing with any unfavorable scenario that might emerge.”
In September, the metrics showing the greatest improvement were in U.S. consumer sentiment, up 32.6 percent; new unemployment claims; down 24.6 percent; unemploymeny benefit exhaustions, down 22.8 percent; manufacturing wage, up 6.5 percent; total manufacturing wage hours, up 3.3 percent; and the unemployment rate, down 0.8 percent.
The metrics showing a downslide in August were single-unit permits; down 8.8 percent; employment service jobs, down 5.7 percent; retail sales, down 2.4 percent; government employment, down 2.1 percent; a diminished labor force, down 0.9 percent; and private, service production employment, down 0.2 percent.