Economy shrinks in larger number of US states, Fed gauge shows
Economic activity shrank in eight U.S. states and was stagnant in three others during the fourth quarter, according to the latest data from the Federal Reserve Bank of Philadelphia.
West Virginia’s economy contracted the most, while a decline in neighboring Pennsylvania was among the worst in the nation, based on state coincident economic indexes released by the regional Fed bank on Wednesday. While gauges increased in 39 states, a measure of economic activity for the nation as a whole fell to 62 at the end of the fourth quarter, the lowest reading since 2010.
A faltering economic outlook in Pennsylvania may play a role in President Donald Trump’s re-election bid. While employment increased in the Keystone State over the past three months, the unemployment rate increased significantly and average hours worked in manufacturing decreased.
Economies in Delaware, Iowa, Montana, Missouri, Oklahoma, and Vermont also declined compared with three months earlier. The three-month diffusion index now shows the greatest number of states contracting since the recession.
Nonetheless, the state-level figures are more volatile than national data, and single events, such as hurricanes, plant shutdowns, or temporary swings in demand for a particular product, can have outsize effects on those economies. The longest-running expansion on record is not expected to end soon, according to the consensus of economists surveyed by Bloomberg.
The coincident indexes combine four state-level indicators to summarize current economic conditions with a single statistic. The four state-level variables are payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and inflation-adjusted wages and salaries.