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Economy in Brief

Philadelphia Fed Coincident Indexes
by Charles Steindel  June 29, 2018

On June 27 the Philly Fed released the May estimates for state coincident economic indexes. These indexes, based largely on details of state payroll employment reports and calibrated to have trends similar to a state’s real GDP, allow for a reasonably consistent and meaningful comparison of monthly economic gains across the nation.

Over the three months ending in May, the Philly Fed report shows widespread growth. All states were positive, and 18, in a wide band from Maine to Arizona, were estimated to have grown more than 1% (at an annual rate, that would be north of 4%).

While the statistical techniques used to compute the indexes do their best to smooth out erratic high frequency moves, it’s possible that even three-month changes can be somewhat distorted. A better sense of the pattern of economic growth may be better gauged by looking at twelve-month changes. In the year ending in May, it seems as if growth was highest in the west, with New Mexico, Utah, Nevada, California, and Arizona listed as four of the five states with growth above 4% (Delaware was the fifth, hardly of a size to provide much offset). On the weaker side (under the national gain of 2.9%- no state was negative) were some energy producing-intensive states (Alaska, West Virginia, North Dakota, Louisiana), as well as some in the Northeast (New York, New Jersey, Connecticut, Maryland, Rhode Island). The strength in the West, and the softness in the energy-producing areas, has been ongoing. The relative weakness in the Northeast could be, perhaps, merely the continuation of very long-term trends (in the region, only Massachusetts, which has been growing vigorously the last few years, and the small states of Delaware and Maine reported notably higher gains than the nation over the last year). However, the fairly soft showing of New York belies ongoing claims that the Empire State has been surging; it’s possible that costs (real estate, etc.) may now be inhibiting its growth.

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