The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for January 2012 that are a measure of current activity, and so a good measure of how widespread is the recovery. In the past month, the indexes increased in 48 states, decreased in one (Alaska), and remained unchanged in one (Wisconsin) for a one-month diffusion index of 94. Over the past three months, the indexes increased in 48 states, decreased in one, and remained unchanged in one for a three-month diffusion index of 94, said Calculated Risk.
Graph: Calculated Risk
The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.
Graph: Philadelphia Fed
Pundits and economists will soon ask why Wisconsin is lagging. It also had the lowest job creation rate in 2011. Was it because of Governor Scott Walker’s abolishment of union collective bargaining rights? Wisconsin has been hurting ever since. Time and the fall recall election of Governor Walker will tell if its voters realize this.
Harlan Green © 2012