Posted tagged ‘Leading Index’

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The Lastest 50 State Economic Outlook

February 7, 2013

Back in October I posted about the Federal Reserve Bank of Philadelphia’s leading index for each of the 50 states.  The Fed’s leading index for each state contains the same, six, state and national variables so I think they miss some of key indicators that can affect individual states but they are a great way to quickly compare the trends across states.  It is  also good to get a dispassionate, “outsider’s” view of the direction of every state’s (including your own)  economy.  Below is the latest summary of what each state’s  leading index is saying about the growth prospects over the next six months.

LeadingIndexes1212

Unfortunately, NH is again showing up in the group of states that is expected to lag in economic growth over the short-term.  PolEcon’s NH Leading index contains more NH specific economic indicators than does the Philly Fed’s NH Leading Index but the two indices generally agree on the short-term direction of the NH economy.  Not this time.  PolEcon’s NH leading Index is signalling an uptick in the rate of NH’s employment growth.  As I noted back in October, statistical tests show a stronger relationship between PolEcon’s Leading Index and the rate of NH’s employment growth than the relationship between the Philly Fed NH Index and NH’s employment growth.  I wish I could say I was confident my index was going to be more accurate this time but I can’t.  I do take some comfort in knowing  that whenever I have had the most doubts about the predictive ability of the NH Leading Index it always seems to do the most to confirm its value.

NH Leading Index

Categories: employment, Leading Index, NH Economy
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The Sun Will Come Out Tommorow

January 3, 2013

I have been uncharacteristically and uncomfortably gloomy in my assessment of the NH economy lately, but I still hold out hope that New Hampshire’s job growth numbers for 2012 will be revised upward early in 2013 based on the volume of help-wanted advertising in the state and reported growth in aggregate wage and salary income in the state.  Even if that doesn’t happen there are encouraging signs that job growth will accelerate.   PolEcon’s NH Leading Index increased this month to a value of 13.0, down slightly from 16.7 the prior month, but it has registered its highest three-month reading since early in 2010.    At least some uncertainty around the  “fiscal cliff” that caused many firms to postpone hiring has been removed.   The U.S. Treasury debt ceiling still needs to be raised this month and a repeat of the last debt ceiling antics could produce another big drop in business and financial market confidence, but overall, the national and NH economies appear poised to see accelerating job growth as 2013 progresses.

Polecon NH Leading Index

PolEcon’s NH Index of Leading Indicators is a diffusion index consisting of nine state and national indicators of economic activity designed to predict changes in the rate of employment growth in NH.  When index scores are above zero, more of the leading indicators are moving in a positive direction and the NH economy is expanding. The Index has a strong statistical relationship with changes in NH employment, Index scores lead changes in the rate of NH employment growth by 3-6 months.  Using statistical techniques, Index scores can also be converted into a probability that NH will be in  a recession sometime within the subsequent six months.

Leadin Index Components

Categories: employment, job growth, Leading Index, New Hampshire, NH Economy
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State-by-State Economic Outlook for the Next Six Months

October 19, 2012

The Philadelphia Region Federal Reserve Bank is producing a leading economic index for each state.   The index contains the same economic variables for each state so it is not customized to the specifics of each state’s economy.  Some of the index variables are national  (similar to  my “PolEcon NH Leading Index”) but all of the key economic indicators included yield important information about the likely direction of any state’s economy.  The graph below from the Philly Fed suggests that NH, along with VT and CT, will lag the region and much of the country in economic growth over the coming months.

The Philly Fed index isn’t designed to predict just job growth like PolEcon’s (my) NH leading index, but the two indices move in similar ways with changes in the NH economy.  I’ve test the ability of both to accurately forecast near-term (6 month) job growth and the PolEcon index does a  significantly better job.  But the PolEcon Index was modeled and  fit specifically to NH data, testing a number of economic variables that have the strongest relationship to NH’s near-term job growth.  Doing that for 50 states might be prohibitive, especially for an institution (The Philly Fed.) that primarily serves one economic region of the country.   I like the Philly Fed index because and it is great to have a readily available (read free), state-by-state, near-term, economic outlook from a respected and unbiased source.  I like it even more when it agrees with the PolEcon Index, as it does now.

Categories: job growth, NH Economy, U,S, Economy
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