The South Jersey Business Survey has been asking firms the same questions every quarter without interruption for 25 years, providing a consistent basis for observing ups and downs in the area’s economy. The Philadelphia Fed has conducted this survey in cooperation with the Chamber of Commerce Southern New Jersey, whose members make up the survey’s respondents. After a quarter-century, we have enough results in hand to look at how useful the survey’s indexes have been as economic indicators. The Philadelphia Fed, of course, is not the only party with an interest in knowing how meaningful the survey’s results are for gauging current and future business conditions in South Jersey. Firms, community groups, state and local policymakers, and others increasingly rely on survey-based measures to round out their views of the economy and to help inform their decisions. Although qualitative, survey data can still provide valuable information that is timelier than or unavailable from other sources.
So, how can we test whether the survey’s structure and methodology remain valid? How do survey-based measures enhance our understanding of economic fluctuations? Does the South Jersey survey do a reliable job of picking up on economic conditions later reflected in the official hard data on employment and other vital measures? Are improvements to the survey warranted? We look first to the structure of the survey’s indexes and then explore how its results correlate with nonsurvey indicators and such phenomena as local economic shocks and recessions.
This article appeared in the Second Quarter 2017 edition of Economic Insights. Download and read the full issue.