Nearly Half the Country Is Not Growing Economically, New Philly Fed Data Show

President Joe Biden speaks about manufacturing investments in regional clean hydrogen hubs at Tioga Marine Terminal in Philadelphia, Pa., on Oct. 13, 2023. Madalina Vasiliu/The Epoch Times

Despite the U.S. economy being projected to grow around 2 percent in the fourth quarter, new Federal Reserve Bank of Philadelphia data show that half the country is not recording any growth, and other states are barely expanding.

The regional central bank recently published the November Coincident Economic Activity Indexes for all 50 states, using four key indicators: non-farm payroll employment, the unemployment rate, average hours worked in manufacturing, and wages and salaries.

The final three-month reading showed that the indexes climbed in 25 states, tumbled in 21 states, and remained stable in four (Hawaii, Kansas, Nebraska, and Louisiana).

Nevada was the top state in the country for growth, followed by Florida, Georgia, Minnesota, North Dakota, and South Carolina.

Three states have experienced sharp contraction: Michigan, Montana, and West Virginia. Other notable areas of the nation to report negative growth were Arizona, Illinois, Massachusetts, New Jersey, and New York.

For Illinois, economic conditions could continue to weaken. The Institute for Supply Management’s Chicago Business Barometer, also known as the Chicago PMI, returned to contraction after posting growth in November for the first time in 15 months.

When the Philadelphia Fed’s Coincident Index assessed a single month of data, 21 states endured negative growth, 18 states increased, and 11 were in stable condition.

But while the U.S. economy appears to have slowed since the gangbusters third-quarter GDP report, the Philly Fed is not anticipating a recession.

According to the Fourth Quarter 2023 Survey of Professional Forecasters, “the outlook for the U.S. economy looks somewhat better now than it did three months ago.”

The institution expects the national economy to have expanded at an annualized rate of 1.3 percent in the October-to-December period, up slightly from the previous estimate of 1.2 percent.

For 2024, the survey projected real GDP growth to be 2.4 percent.

The odds of an economic downturn next year stand at 40.9 percent.

CB’s Index: ‘Short and Shallow Recession’

The Conference Board released the data from its Coincident Economic Index (CEI) just before Christmas. The CB’s CEI analyzes several other economic components, including personal income less transfer payments, industrial production, and manufacturing and trade sales.

In November, the CEI rose 0.2 percent, up from a flat reading in October. Over a six-month period between May and November, the CEI is up 1 percent, as all the indicators were in positive territory.

But The Conference Board still predicts “a short and shallow recession” in the first half of this year.

“Despite the economy’s ongoing resilience—as revealed by the US CEI—and December’s improvement in consumer confidence, the US LEI suggests a downshift of economic activity ahead,” said Justyna Zabinska-La Monica, the senior manager of business cycle indicators, in the report.

“As a result, The Conference Board forecasts a short and shallow recession in the first half of 2024.”

A customer walks into a Target store in Sausalito, Calif., on Nov. 3, 2023. Justin Sullivan/Getty Images

It will be a busy start to the new year as several major economic reports will be released.

On Jan. 2, the S&P Global Manufacturing Purchasing Managers’ Index (PMI), a general trend on where the sector is going, showed more severe deterioration in December. For all of 2023, the industry was stuck in contraction territory for 10 months.

“US manufacturers ended the year on a sour note,” wrote Chris Williamson, the chief business economist at S&P Global Market Intelligence, in the monthly PMI survey.

“Output fell at the fastest rate for six months as the recent order book decline intensified. Manufacturing will therefore likely have acted as a drag on the economy in the fourth quarter.”

According to the U.S. Census Bureau, construction spending rose 0.4 percent in November, down from an upwardly revised 1.2 percent in the previous month, and fell short of the consensus estimate of 0.6 percent.

The main event will be on Jan. 5, when the December jobs data are published. Economists project 168,000 new jobs, a 3.8 percent unemployment rate, and a year-over-year average hourly earnings increase of 3.9 percent.

“We expect the December data will show a slight uptick of 186K jobs, with the unemployment rate ticking higher to 3.8% from 3.7% in November,” said RBC Economics in a note.

“November employment data was firmer than expected but against a backdrop of slower job growth. A continued moderation in inflation pressures alongside easing labor market tightness are expected to keep the Fed on the sidelines on January 31st.”

Looking ahead to the entire year, the Congressional Budget Office (CBO) projected softer labor market conditions in its annual Budget and Economic Outlook.

The nonpartisan budget watchdog says the unemployment rate will climb to 4.4 percent by the year’s end and hover in that area throughout 2025.

“The labor force grows at a moderate pace, with an increased contribution to that growth stemming from projected immigration over the next two years,” the CBO stated.

In the first 11 months of 2023, the U.S. economy created 2.552 million new jobs.