Construction Forecasts

News & Analysis

Economic Activity Declines in Seventeen States in July

08/29/2011 by Jim Haughey, RCD Chief Economist

The Federal Reserve Bank of Philadelphia regional economic activity indexes declined in July from June in seventeen states in all regions of the county but primarily in the South and West. Nonetheless, the economic activity index increased marginally in all regions except the Great Lakes. Both the South Atlantic and Rocky mountain regions recorded barely positive index increases. The economic activity index increased at a 6% annual pace in New England, which has relatively little manufacturing, and a 4% annual pace in the Gulf states driven by high energy prices and job growth.

The growth rates are the state economic growth indexes calculated by the Philadelphia Federal Reserve Bank from state employment and income data which are benchmarked to approximately track national GDP growth. State growth rates are currently below the national growth rate because much of the 4th quarter GDP gain was due to exports. These data are not available immediately at the state level.

State Economic Activity Index
Annual Growth Rate – last 3 months
(sea. adj. ann. rate)
New England 5.1 Northeast 3.5
South Central 4.2 South 2.5
Plains 3.0 West 2.0
Mid Atlantic 2.9 Midwest 1.6
Rocky Mountain 2.1
Pacific 1.9
Great Lakes 1.0
South Atlantic 0.9
Source: Philadelphia Federal Reserve Bank
Index Decline from Recent Peak
South Central -0.8 Northeast -1.5
Mid Atlantic -1.4 South -4.7
New England -2.0 Midwest -6.9
Plains -4.9 West -7.9
Pacific -5.1
Great Lakes -8.0
South Atlantic -9.0
Rocky Mountain -13.3
Source: Philadelphia Federal Reserve Bank

New England remains the fastest growing region (over the last three months) followed closely by the Gulf region. Led by Massachusetts, Rhode Island and New Hampshire, the New England economy is being boosted by the regions’ high concentration of high tech and intellectual property industries.

Other high growth states in the last three months include North Dakota, New Mexico, Wyoming and Oklahoma. Credit this surge to higher energy prices. Seven states failed to expand in the last three months. This includes Michigan and Indiana in the Midwest due to a manufacturing slowdown, Alabama and Arkansas in the South and Vermont and Alaska which all have ongoing public spending cuts and Nevada which continues to suffer from its damaged housing market and now from another round of consumer spending declines.

Uncertainties in public employment cloud the outlook for both overall US economic growth and for regional differences. The recent debt deal calls for massive cuts in federal spending but the timing and distribution is not yet known. No agreement by yearend on over $100 billion/year in cuts could force mandatory cuts beginning early in 2012 which would fall heavily in the Washington area and around large military bases, mostly in the South and West.

Only North Dakota, Massachusetts and New York have recovered to the pre-recession level. Alaska reached this level earlier this year but has slipped back. Texas will likely recover to the pre-recession level this summer.

Nevada, Michigan, Idaho, Arizona and Florida are the five most depressed states with their economic activity indexes more than 15% below the pre-recession level. The recovery will be long and slow. Each of these states has a relatively large foreclosure problem that may still be worsening and has experienced outmigration during the long recession.

Recent Economic Performance by State

Ranking States by Recent Economic Performance – July 2011
Index Change Last three months
(annualized – June)
  % Change in Economic Activity Index – From 2007-08 Peak Index Value
Top 25 Bottom 25   Top 25 Bottom 25
ND 9.3 FL 2.0   MA 0.0 UT -7.2
OK 6.9 CA 1.9   NY 0.0 IN -7.3
WY 6.6 IA 1.5   ND 0.0 OH -7.3
NM 6.5 ID 1.5   TX -0.1 WV -7.7
MA 5.1 AZ 1.1   AK -0.2 IL -8.1
RI 5.1 MT 1.0   SD -1.3 OR -8.1
TX 4.4 TN 1.0   NH -1.6 NM -8.1
OR 4.3 WA 0.9   MN -2.2 KS -8.5
UT 3.8 MD 0.9   LA -2.3 NC -9.0
WV 3.5 ME 0.8   WY -2.3 RI -9.2
SD 3.5 SC 0.8   CT -2.9 GA -9.3
LA 3.5 DE 0.8   PA -2.9 MD -9.4
NE 3.3 MS 0.7   NE -3.2 WA -10.0
PA 3.2 NC 0.5   VT -3.2 MT -10.5
NH 3.1 HI 0.4   CA -3.7 HI -11.1
WI 3.1 IL 0.3   IA -3.8 SC -11.2
OH 2.9 GA 0.0   WI -3.9 MO -11.6
NY 2.9 VA 0.0   OK -4.0 DE -11.9
MO 2.9 IN -0.3   MS -4.1 AL -12.5
KS 2.8 AK -0.5   NJ -4.5 ME -12.8
KY 2.7 AR -0.5   VA -4.8 FL -15.0
MN 2.6 VT -0.5   TN -5.4 AZ -15.7
CT 2.5 MI -1.4   KY -5.5 ID -18.9
CO 2.5 AL -2.0   AR -5.6 MI -29.2*
NJ 2.4 NV -2.0   CO -7.1 NV -35.6
*cyclical low before 2008-09
Table: Reed Construction Data and Reed Construction Data – CanaData

Email

RSS Feed

» return to previous page
10683

Member Comments

Post Your Own Comments 
» Not a member? Register now to become one. Otherwise, login to post your comments on this article.

click here to update your log-in and member information

click here to maintain your company profile & view metrics

Keep Up To Date with eNewsletters
Keep up to date with our variety of complimentary weekly and monthly eNewsletters covering the construction industry.
Join accessArchitecture Now!
accessArchitecture members get free pre-design leads in exchange for providing project information