NEW YORK—Economic recovery is firmly in place in New York State, New York City, and New Jersey, according to the Federal Reserve Bank of New York’s Indexes of Coincident Economic Indicators (CEI). These indexes demonstrate that the expansion in economic activity started in both New York State and New York City in August 2003; the expansion in New Jersey started five months earlier, in March 2003. The CEI also showed that the downturn was a good deal less severe than the region’s last major economic slump from 1989-1992.
The New York Fed’s CEI , a monthly composite measure used to track the overall level of economic activity, was first developed in October, 1999. The cumulative data through March, 2004 show:
- New York State’s economic downturn began in December 2000 and ended in August 2003, with economic activity declining roughly 9.0 percent, compared with a 15.0 percent decline in the 1989-1992 downturn. Manufacturing job losses upstate and financial market weakness downstate contributed to the statewide decline in activity. There have been sustained increases in the activity index since August 2003.
- New York City’s economic downturn began in January 2001 and ended in August 2003. Despite several negative shocks to the city’s economy—the 9/11 attack, financial market weakness and the national downturn—the roughly 9.0 percent decline in economic activity over this period was less than the 14.0 percent decline in the 1989-1992 downturn. Aside from a slight dip in December, economic activity in the city has expanded every month since August 2003.
- New Jersey’s economic downturn began in November 2000 and ended in March 2003. The downturn was relatively mild, with activity declining about 3.5 percent over the period, compared with a 12.0 percent decline in the 1989-1992 downturn. The decline was also milder than in New York, reflecting, in part, more favorable employment performance in several sectors. There have been sustained, though modest, increases in the index since March 2003.
The New York Fed’s CEI can be used to measure the timing and severity of business cycles in these state and local economies. It is important to note that because of inherent differences in the economic performance and structure of regional economies, along with differing methodologies used to date business cycles, the business cycles reflected in the New York Fed’s CEI may not be comparable to the national measure. Therefore, the New York Fed’s measures of peaks and troughs in these state and local economies will not necessarily match national recession and recovery as defined by the National Bureau of Economic Research.
The indexes for each of the three geographic areas are computed independently. Each index is constructed from four variables—payroll employment, average weekly hours worked in manufacturing, the unemployment rate, and real earnings—and captures the influence of national and local factors on activity.