The Federal Reserve Bank of Philadelphia has produced state coincident indexes since 2005. These indexes are monthly indicators of economic activity for each of the 50 U.S. states, based on a composite of four widely available data series on state conditions: total nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing, and real wages and salary disbursements.1

Researchers and others have used the indexes2 as an effective measure of economic activity. This Research Rap Special Report provides some measures of the effectiveness of the indexes as a measure of state gross domestic product (GDP) and an analysis of revisions to the indexes.

  1. The methodology applies a standard econometric methodology, the Kalman filter, to a system of equations that produce the state coincident indexes from the four underlying variables. The econometric methodology is intended to estimate the economic trend that underlies the four indicators and the average annual growth rate of state GDP. For further discussion of the methodology, see Theodore M. Crone and Alan Clayton-Matthews, “Consistent Economic Indexes for the 50 States,” Review of Economics and Statistics, 87 (2005), pp. 593-603.
  2. Bradley T. Ewing and Mark A. Thompson, “A State-Level Analysis of Business Cycle Asymmetry,” Bulletin of Economic Research, 64:3 (2012), pp. 367-76; Rick Mattoon and Leslie McGranahan, “Revenue Bubbles and Structural Deficits: What’s a State to Do?,” Federal Reserve Bank of Chicago Working Paper 08-15 (2008); Michael T. Owyang, Jeremy Piger, and Howard J. Wall, “Business Cycle Phases in U.S. States,” Review of Economics and Statistics, 87:4 (2005), pp. 604-16.
View the Full Report