Recession Indicators: US Regional Economic Indicators

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Regional Economic Indicators Help Tell the Story

There are a number of US regional economic indicators that add value to any forecast. These include various regional Fed surveys, state Leading and Coincident Economic Indicators that serve as regional proxies, industry surveys that can serve as proxies for entire regions, and so forth.

On this page we will focus on a number of the regional economic indicators mentioned above as well as others as warranted.

CALIFORNIA (WESTERN REGION) LEADING ECONOMIC INDEX

California Regional Economic Indicators

The above graph is a screencap of the California Leading Economic Index courtesy FRED. The most recent update was for December, 2019 and this update was made public on Feb 4, 2020.

While the index is released on a monthly basis, we have adjusted it to reflect changes on a quarterly basis, and therefore the last update includes all of Q4 2019.

The red line was painted in by us to reflect what is known as a “stall warning,” or a level which once an index falls below strongly suggests an economy (state, region, national, world, etc.) is at serious risk of falling into recession. Generally speaking, an LEI running above 2% is likely to be firing on all cylinders over the next several months; below 2% but above 1% is weak, but not especially vulnerable, below 1% but above zero, increasing recessionary window of vulnerability; and anything below zero suggests highly vulnerable to falling into, if not already in, recession.

IOWA (CENTRAL REGION) LEADING ECONOMIC INDEX

Iowa Regional Economic Indicators

As can be seen in the Iowa LEI, which is a fair proxy as for central US Regional Economic Indicators, this index spent the last half of 2018 and the entirety of 2019 in the under 1% danger zone, having been beaten and battered by the ongoing Trump Slump, and as of Q4 2019, had gone negative for the first time since the Great Recession.

NEW YORK (EASTERN REGION) LEADING ECONOMIC INDEX

New York Regional Economic Indicators

The last of our three regional proxies, the New York State Leading Economic Index, shows a similar pattern to Iowa above, with this LEI falling below the critical stall threshold of 1% in the final quarter of 2018, and for the most part remaining there and getting even weaker in a saw-toothed pattern throughout the course of last year.