KINGSTON – “Rhode Island started 2009 with two bits of good news,” University of Rhode Island economist Leonard Lardaro wrote in his monthly economic outlook report. “The first is that 2008 is at long last over. … Second, [is] the value of the Current Conditions Index for January,” which more than doubled to 17 points.

That was the highest reading his index has achieved since its 33-point score in December 2007. (The index – designed to predict the direction of the Rhode Island economy – has a maximum of 100 points. Scores above 50 points indicate the local economy is expanding, while lower values indicate a contraction.)

The CCI held at 8 points for most of last year, falling to its absolute low of 0 in June, August and, in revised data, October – the only monthly score significantly affected by the U.S. Bureau of Labor Statistics’ annual labor-market data revisions. “While my prediction that December’s [state] unemployment rate would be revised down from 10 to 9.4 percent was correct,” Lardaro said, “my hope was that it would take a couple of months for us to get (back) to double digits. No such luck! The unemployment rate for January was 10.3 percent, a full four percentage points higher than its value one year ago.” (READ MORE)

“Is it good news that this horrific unemployment rate now gives us a national rank of No. 3, behind Michigan and South Carolina?” (READ MORE) “Your answer to this question will define the degree of desperation you find our state’s economy to be in.”

He saw three pieces of “good” news for Rhode Island’s economy in January:

• “The manufacturing wage increased again, as it has for most of the last year,” rising 0.1 percent compared with the same month a year ago. “Its slow rate of increase … was partly the result of a difficult ‘comp’ where its rate of increase was 3.9 percent last January.” (READ MORE)

• New claims for unemployment insurance fell 3.3 percent compared with January 2008, in their first decline since July, indicating that layoffs are beginning to taper off.

• In what usually would be considered a negative, the number of single-unit permits issued for new home construction in Rhode Island fell 59.5 percent year over year, to a January total of 26. “New home construction in Rhode Island was essentially non-existent,” Lardaro wrote, adding: “The good news here is that this will help keep our stock of unsold homes down.”

On the down side, despite the decline in new claims, the state’s overall jobless rate rose 63.5 percent compared with January 2008. And benefit exhaustions, a marker for long-term unemployment, rose 40.2 percent.

The mood of U.S. consumers – measured by the University of Michigan’s Consumer Sentiment Index – fell 22.1 percent compared with a year ago, while retail sales fell 3.3 percent. Total manufacturing hours fell 10.7 percent year over year, more than offsetting the rise in the average manufacturing wage.

The number of employment services jobs – a category that includes temporary workers – fell 22.3 percent, continuing “its string of double-digit declines that began last July.” Private service-producing jobs fell 2.7 percent and government employment fell 2.3 percent. And the size of the local labor force shrank 1.1 percent compared with a year ago.

Going forward, Lardaro wrote, “if my expectation is correct, the fourth quarter of last year will prove to have been the most rapid rate of decline we will ultimately see. That’s not to say, of course, that declining activity won’t continue here – clearly it will, throughout this entire year.”

Still, he said, “assuming that no ‘shoes’ drop globally, things should eventually get more predictable – and perhaps tolerable – as we move toward the end of this year.”

The Current Conditions Index, created by University of Rhode Island economist Leonard Lardaro, measures the strength of the state’s economic climate. The index – based on 12 key economic indicators related to housing, retail sales, the employment situation and the labor supply – attained its maximum value of 100 points several times in 1984 and 1986. Additional information, including historical data back through 1980, is available at members.cox.net/lardaro/current.