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March 21, 2012

Just Released: January’s Indexes of Coincident Economic Indicators Show Fairly Robust Activity across the Region

Jason Bram and James Orr

The January Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, show fairly robust economic growth entering 2012. Importantly, this month’s release incorporates the annual benchmark employment revisions for 2010 and 2011, with the revised indexes revealing that the regional economy had more momentum in the second half of 2011 than previously thought.

The CEIs reported here are single composite measures designed to provide a monthly reading of economic activity. They are constructed from four data series: payroll employment, the unemployment rate, average weekly hours worked in manufacturing, and real (inflation-adjusted) earnings. Details of the construction of the CEIs can be found in a 1999 Federal Reserve Bank of New York Current Issues in Economics and Finance article; a more recent article in the series illustrates how the CEIs are used to analyze regional economic trends.

The CEIs indicate that economic growth picked up in January 2012 across the region. In New York State, activity bottomed out at the end of 2009, growing in fits and starts since then. While activity actually stalled a bit last fall, New York State’s economy still managed to grow at an average rate of 2 to 3 percent in both 2010 and 2011. Growth in the state spiked up to a 6 percent annual rate in January 2012. The current level of activity, however, remains well below the state’s previous 2008 peak.

The index for New York City shows that the recovery of activity also began in late 2009. The city’s recovery has been quite strong, with activity growing at a sustained pace of nearly 5 percent in 2010 and close to 4 percent in 2011. The indexes released today show that the city’s economy remains on a sturdy growth track—activity is up 3.5 percent over the past year and the level of activity is now estimated to have exceeded its prerecession peak. In contrast to the nation, which suffered its most severe recession since the 1930s, the magnitude and duration of New York City’s downturn look no worse than they did in the 1990 and 2001 downturns.

The index for New Jersey shows that the recovery there took a while to get going, and even the revised indexes still show the state’s economy hitting bottom in March 2010 and remaining flat for much of that year. Activity in the state expanded moderately in the first three quarters of 2011 and accelerated in the final three months of the year. Growth quickened further in January 2012, and activity is now up more than 2 percent over the past twelve months—the state’s strongest year-over-year growth since 2005. Nevertheless, sustained growth in activity will be needed for some time before the state again reaches its 2008 peak.

All in all, January’s report shows that the pace of growth in economic activity has picked up across the region. Updates to the regional CEIs are provided on a monthly basis.

The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.

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