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September 26, 2012

Just Released: August Indexes of Coincident Economic Indicators Show Uneven Growth across the Region

Jason Bram and James Orr

The August Indexes of Coincident Economic Indicators (CEIs) for New York State, New York City, and New Jersey, released today, give a mixed picture of current economic performance across the region. Economic activity in August expanded at a robust pace in New York City while activity in New York State and New Jersey grew at a more modest pace, continuing the pattern seen since the spring.

The monthly CEIs reported here are single composite measures designed to provide a current 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 has varied considerably across the region. In New York State, activity has grown in fits and starts thus
far in 2012. After expanding at a brisk pace during the first quarter, activity leveled off in April and May. Since then, New York State’s economy has expanded at an annual rate of a little less than 2 percent, on average. Despite the modest growth of late, the state’s economy has, at this point, reversed more than two-thirds of the decline during the Empire State’s last downturn, which is estimated to have ended in November 2009.

The index for New York City shows the local economy continuing to expand briskly. Since surpassing its pre-recession peak one year ago, the city’s economy has grown at not only a healthy, but also a steadily accelerating pace. Growth averaged roughly 2½ percent in the second half of 2011, 4½ percent in the first half of 2012, and more than 5½ percent in July and August. The economy is estimated to have expanded by 12 percent since the trough of the last economic downturn in October 2009. That downturn appears to have been both shorter and somewhat milder than the 1990 and 2001 downturns, and the pace of the ensuing recovery has been at least as robust.

The index for New Jersey shows that the recovery there remains on a modest but steady track. Activity has expanded at an annual pace of just under 2 percent during the past year and at about 1½ percent in recent months. Growth in New Jersey’s economy, as in New York’s, picked up in late 2011 and early 2012 but has been more subdued since the spring. The trough of the state’s recession came in November 2010—more than a year after the national recession ended. Since then, the Garden State’s economy is estimated to have rebounded by 2.7 percent, reversing somewhat more than a third of the decline during the recession.

In summary, August’s report shows that the pace of expansion in economic activity has been relatively moderate across the region in recent months, except in New York City, where growth has been increasingly robust.

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.

Jason Bram is a senior economist in the New York Fed’s Research and Statistics Group.

James Orr is an assistant vice president in the New York Fed’s Research and Statistics Group.

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