Loading ...How’s your state doing? I’d love to hear about it in the comments section.
On this site, I share a lot of indices that tell us how things are going in the country. But what each of you feels is much more related to what’s happening in your specific state. Wouldn’t it be great if there were some indices we could follow that tracked that? Fortunately, that’s exactly what the Federal Reserve Bank of Philadelphia does on a monthly basis.
They produce a “Coincident State Index” that combines several different economic factors into one number. This basically tracks the current rate of GDP (measure of all economic output) growth (or contraction if it’s negative) for the state. The other index is a “Leading State Index” that combines several different leading indicators to predict how much the Coincident State Index will be growing over the next six months.
Philadelphia Fed State Coincident Indexes
Look at the chart below to see how fast each state’s GDP is growing right now. It’s color-coded, so the green colors mean the state’s economy is growing (the darker the better), and the red colors mean the state’s economy is shrinking (the darker the worse).
Source: PhiladelphiaFed.org
Philadelphia Fed State Leading Indexes
Look at the chart below to see how fast each state’s Coincident Index is expected to grow over the next six months. It’s color-coded, so blue is the best, and the green colors mean the state’s economy is expected to grow (the darker the better), and the red colors mean the state’s economy is expected to shrink (the darker the worse). 
Source: PhiladelphiaFed.org
Easy Take
The overall picture painted by these reports is positive. Most states have improved over the last 3 months and are poised to improve over the next 6 months.
Coincident Indicator Overview
Over the last month, the coincident index has improved for 44 states, worsened for 4 states and stayed the same in 2 states. That translates into a “diffusion index” of 80, which is a measure of how widespread the increases were. The highest diffusion index possible is 100, and the lowest is 0. The one-month diffusion index is a little better than the 3-month diffusion index of 74, but they are both still strong numbers. Michigan, West Virginia and North Dakota had the largest one-month increases in their index values (calculated directly from the spreadsheet provided on the press release.) Minnesota, Alaska and Wisconsin are the three with the biggest one-month drops, although none had a large drop at all.
Leading Indicator Overview
Things look even brighter (or rather greener!) for the leading index chart. There are 46 states projected to have a higher coincident index in 6 months and only 4 states projected to have lower ones. This is identical to the report from last month, when those numbers were 46 and 4, respectively. West Virginia, Alabama and Nevada had the largest one-month increases in their index values (calculated directly from the spreadsheet provided on the press release.) Alaska, Minnesota and Kentucky are the three with the biggest one-month drops. Rhode Island is the only state to have its color change from a green to a red shade versus last month’s report, meaning it is likely that their coincident indexes will be lower in 6 months than they were in November.
Combined Look at the Maps
Alabama and South Carolina are in great shape. They are the only two states with the best shade of blue for the leading indicator and the darkest shade of green for the coincident indicator. Rhode Island and Wyoming are in rough shape as they are the only two states that are supposed to see declines in the coming 6 months despite already having declined over the past 3 months.
Just focusing on the changes in the last month, West Virginia had the second highest increase in coincident indicator level and the highest increase in the leading indicator level. Alaska and Minnesota were both in the bottom three for coincident and leading indicator monthly change.
The one caveat I’ll mention is that these state-level leading indexes use “interest rate spreads” as part of the calculations. That is, they look at the difference between the interest rate that longer-term US Treasuries are paying versus very short-term ones. Because the Federal Reserve has intervened and lowered interest rates to essentially zero, using this kind of analysis as part of the equation can yield overly optimistic results.
Related posts:
- Indicator: How’s Your State Doing? Philadelphia Fed Index for Every State a Bit Better (thru September 2011)
- Indicator: How’s Your State Doing? Philadelphia Fed Index for Every State Paints a Bright Picture (thru October 2011)
- Indicator: How’s Your State Doing? Philadelphia Fed Index for Every State (thru August 2011)
- Indicator: Philadelphia Fed Index for Every State
- Economic Indicator Roundup: Monitoring the State of the Economy (September 26, 2011)
