Tuesday, August 28, 2012

Philly Fed: Colorado economic index lags nation, but is still growing

The Coincident Index for Colorado rose 0.16 percent from June 2012 to July 2012, which was nearly equal to the national index's increase of 0.17. July's index, which was released last week by the Philadelphia Federal Reserve Bank, is an index calculated from 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 three-month change in the index, shown in the map here, was larger in Colorado than in 28 states.The 3-month change was 0.31 percent in Colorado and 0.57 percent for the nation. The U.S. is in the middle of the pack compared to other states.

According to the July 2012 report:

The Federal Reserve Bank of Philadelphia has released the coincident indexes for the 50 states for July 2012. In the past month, the indexes increased in 22 states, decreased in 17, and remained stable in 11, for a one-month diffusion index of 10. Over the past three months, the indexes increased in 32 states, decreased in 14, and remained stable in four, for a three-month diffusion index of 36. For comparison purposes, the Philadelphia Fed has also developed a similar coincident index for the entire United States. The Philadelphia Fed’s U.S. index rose 0.2 percent in July and 0.6 percent over the past three months.

The graph below compares the month-to-month change in both the Colorado Index and the US index. In three of the last four months, the growth rate in Colorado has lagged the nation overall.


The second graph shows year-over-year changes in the index, and an upward trend was evident through most of 2011. Colorado now shows signs of falling below national growth rates, however. Colorado has been below the national growth rate for the past four months.


Overall, this report suggests some slowing in Colorado economic activity in relation to the nation as a whole. Nevertheless, the overall trend is one of mild growth.According to this data at least, Colorado's slow recovery is not outpacing the nation, and is on about the same level as most other states.

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.