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