This morning the Federal Reserve Bank of Philadelphia released the state level coincident indexes for May 2011. According to the report: “In the past month, the indexes increased in 35 states, decreased in eight, and remained unchanged in seven for a one-month diffusion index of 54. Over the past three months, the indexes increased in 45 states, decreased in three (Alaska, Maine, and Mississippi), and remained unchanged in two (Alabama and Vermont) for a three-month diffusion index of 84.” Oregon is one of the states that has seen its index increase in both the most recent month and the past three months. In fact, Oregon’s index has increased each month since June 2009, or for 23 consecutive months. The graph below plots Oregon’s coincident index since 1979 along with the probability Oregon is in recession. Note that the recession probabilities are produced by University of Oregon Professor Jeremy Piger, data available HERE.
Given that Oregon’s economy is more volatile than the nation’s and employment is likewise more volatile, it follows that Oregon’s relative ranking based on the Coincident Index exhibits the same pattern. Remember, the Coincident Index is best thought of as a labor market indicator of economic activity as it is an index based on the four following data series: nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate and real wage and salary disbursements. Currently, Oregon’s relative ranking among all states is quite good – in the top five for most growth comparisons. For example: Oregon’s one month growth ranks 5th best, its three month growth ranks 4th best, its six month growth ranks 3rd best, its one year growth ranks 4th best and its two year growth ranks 4th best. The graph below shows Oregon’s one year growth rank since 1981. As expected, during recessionary times, Oregon’s rank plummets to among the worst in the nation and during expansions, Oregon’s rank improves to among the best in the nation. Note that the ranking, on the left axis, is calculated with 1 being the best/strongest growth and 50 being the worst/weakest growth.