Top URI Economist: RI’s Economy Is Slowing

Thursday, December 15, 2022

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URI Economist Leonard Lardaro PHOTO: file

After two very strong months, Rhode Island’s economy slowed slightly in October. In both August and September, the Current Conditions Index reached a value of 92, and the whole indicator is moving forward. Most interestingly, the CCI indicators in each month exceed those of the previous year which was growing – a case of “comps” very difficult.

Therefore, the economy of the country is moving slowly and after such economic growth, it was expected that the activity will be delayed, which makes the CCI of 75 in October. However, nine of the twelve indicators improved compared to a year ago, with a number of difficult “comps” since last October. Remember the great rule of thumb: Don’t make too much of a month’s worth. After all, October was the sixteenth month in a row that Rhode Island’s economy grew (CCI above 50).

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SOURCE: CCI of Lardaro

We will have to see what happens in the rest of the year, especially the change in monetary policy to know where we go from here. There was one sign that things were going to slow down, however – the monthly performance of the CCI Indicator.

Apparently, its values ​​have been declining since April, which leads to the expectation that the monthly losses will lead to annual changes. The call was made more difficult by the fact that October jobs numbers are often subject to rebenchmarking, which may be the case this year. Therefore, any ideas we see with the first episode of LO (Last Out) are clear ahead of time. Ironically, most of the unused federal funds that Rhode Island received, when used in the coming months, will propel us through 2023, potentially removing us from the LO designation!

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SOURCE: CCI of Lardaro

As we can see in the future, the indicators of two “stars” throughout the epidemic and during the epidemic, Sales and Total Hours of Production, have dropped significantly. Worse, the main indicator, Employment Service Jobs, fell sharply four months after the change. So much for his ride! Retail Sales growth slowed sharply in October to just 2.1 percent, although it has now grown well every month since May 2020. Growth in Total Manufacturing Hours slowed to 1.2 percent in October.

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Do these growth slowdowns indicate a real slowdown in the coming months? Most likely they will. As has been the case for a long time, the two operating systems performed very well in October. End of Profit, which shows long-term unemployment, fell by 48.7 percent, continuing the trend that began in May 2021. New Intentions, which shows jobs that show layoffs, fell by 38.4 percent “only” compared to the previous year. It has also decreased by two rates since July 2021.

As noted above, the hot topic this month was Employment Service Jobs, a leading labor market indicator that includes time. It fell by 6.3 percent, erasing the change for several months. While paid employment has been doing well on an annual basis for some time now, it has fallen month-on-month for the past two months, which could be problematic as it remains below pre-pandemic levels. Residential employment, on the other hand (the number of working people in RI living in or out of state), has been flat for the past four months, when the number of jobs fell in October.

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SOURCE: CCI of Lardaro

Among the two indicators that performed negatively of late, US Consumer Sentiment also fell, down 16.6 percent, missing its fifteenth consecutive month of improvement, while Single-Unit Permits, a measure of new home construction, fell by double-digits. -12.4%), continuing its decline.

The workforce is rising at an annual rate of late, which is in line with rising unemployment. The participation rate in October rose to 4.5 percent.

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