Friday, January 10, 2014

Philly Fed: Colorado Coincident Index now tracking with national index

According to the Philadelphia Fed, the coincident index in Colorado increased 3.6 percent, year over year for November 2013, which was the second-lowest growth rate in the index since July 2012. The moderation in Colorado index puts Colorado closer to the national index growth rate of 3.0 percent, and the Colorado index has slowly been heading down to be closer to matching the national growth rate since January. The first graph shows the year-over-year change in the coincident index for Colorado and the nation:

The second graph shows that in the 3-month change in the coincident index, Colorado has also been moving down to match the nation's growth rates.  This trend has been in place since the end of 2012.  In early 2012, Colorado's index growth was growing at much higher rates than the nation. The second graph shows the 3-month change in the Colorado index and the national index: 

Economic activity in Colorado was relatively strong in 2012 compared to the nation overall. During 2013, however, Colorado's economy moderated while the rest of the nation appears to have gathered some steam. Both Colorado and the nation report growth in all months since 2010. It's just that Colorado, while it once enjoyed a position of robust growth compared to the nation, now appears to be more or less matching the national growth rates. At least according to this index. 

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.