- Sixteen US states’ economies contracted between July and October, according to the Philadelphia Fed.
- While some economists believe a recession may come in the next year, the economies of 33 states grew.
- Meanwhile, looking at just the past month, 27 states experienced economic contraction.
The economies of sixteen US states contracted between July and October, even as economists are still betting the US can avoid a recession.
The latest State Coincident Indexes release from the Federal Reserve Bank of Philadelphia shows a third of state economies contracted during the three month period, compared to just nine states between June and September. Between July and October, the indexes increased in 33 states and remained stable in one state.
These changes were most pronounced in West Virginia, which had a three month decline of over 2.6%. Michigan and Montana also had contractions of over 1%, while Missouri, Illinois, and Iowa were around 0.8% declines.
Meanwhile, Maryland, North Dakota, and South Carolina had economic growth of over 1% during the period. Texas came in at 0.85%, similarly to Nevada and Wyoming. California had a growth of 0.47%, while Florida experienced a 0.65% increase.
Among the 10 states with the highest GDPs, seven — California, Texas, Florida, Pennsylvania, Ohio, Georgia, and North Carolina — are growing their economies, per the three-month data.
This growth "should be enough to keep the US economy as a whole from falling into recession this quarter," DataTrek Research cofounders Nicholas Colas and Jessica Rabe said in a note on Monday. "How these trends develop through the balance of Q4 will tell us a lot about the state of the US economy as we enter 2024."
Looking at month-over-month rates, 27 states experienced economic contraction, while just 16 grew.
A recession occurs when an economy suffers a widespread and severe downturn across different dimensions. The state coincident indexes capture several of those dimensions across labor markets, industrial production, and people's real incomes.
The coincident indexes pull together four state-level indicators including nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing by production workers, and wage and salary disbursements deflated by the consumer price index. Those measures echo the metrics the National Bureau of Economic Research tracks to determine whether the national economy as a whole is in a recession.
Experts remain divided on whether the US will avoid a recession in 2024. Some believe a recession is likely in 2024, including Citadel founder Ken Griffin, who told Bloomberg he expects to see a "recessionary environment" around the second quarter.
Others, though, think a recession may not arrive until 2025 — or may not occur at all. Atlanta Federal Reserve President Raphael Bostic told CNBC, "We are not going to see recession, that is not in my outlook. We are going to see a slowdown, and inflation will get down to 2%."