December 2010

  • Our state activity indexes are now benchmarked to state GDP

  • Our U.S. activity index indicates that the economy expanded 2.9% in 2010 and 3.2% in 4Q10, consistent with BEA’s advance release.

  • We present the 3-month change in our indexes that corresponds to the change in GDP.

  • According to this metric, 47 states are experiencing growth, 2 states are stable and only Delaware is exhibiting contraction. This statistic compares with 45 growing, 3 stable and 2 contracting states in November.

  • The three-month average pace of growth increased in 19 states, eased down in 27, and remained essentially unchanged in the remaining 4.

  • The west coast leads with the highest growth rates, as manufacturing and export activity continue to pick up.


State Index Assessment

Our state indexes reveal a fervent pace of growth in 4Q10, as economic activity strengthened on the West Coast, and cooled across the Great Lakes and northeast U.S. The result was an uptick in the national diffusion index to 48 (out of 50) which is the highest level since 2Q10 when activity was expanding in all 50 states.

Across the Sunbelt, activity accelerated in California, Florida and Arizona: this welcome trend partly reflects stabilizing housing prices and recovery in their residential real estate markets. While employment creation was still weak in December, growth should remain positive into 2011. A deceleration occurred in Alabama, New Mexico, Colorado and Texas as the first two saw a fall in employment, Colorado’s total gain was negligible and Texas shed workers across a few service industries but managed to add 20,000 jobs.

In 4Q10, the Southwest, Rocky Mountain, Plains, Southeast and New England regions exhibited consistent expansion. In the Great Lakes, Michigan managed to register positive growth, and only Delaware currently lags in the Mideast region. As we expect payroll growth to strengthen in the coming months, growth in these indexes will pick up throughout the U.S.