The Federal Reserve Bank of Philadelphia assembles one of my favourite data series: the State Coincident Indexes. These give us an idea of how individual US states are performing economically. I’ll let the Philly Fed do the talking here:

‘The coincident indexes combine four state-level indicators to summarize current economic conditions in a single statistic. The four state-level variables in each coincident index are nonfarm payroll employment, average hours worked in manufacturing, the unemployment rate, and wage and salary disbursements deflated by the consumer price index (U.S. city average). The trend for each state’s index is set to the trend of its gross domestic product (GDP), so long-term growth in the state’s index matches long-term growth in its GDP.’

With the US economy seemingly stabilising, I thought it would be a good idea to see which states were leading the way, given the June 2009 Philly Fed indices (pdf link). For starters, the worst-performing state in June 2009 was in the Pacific Northwest: Oregon (-21.4%), followed not far behind by its neighbour Washington (-15.0%). It’s tough to see exactly why these states are suffering so much, but it probably has to do with the malaise surrounding the tech sector. Rounding out the top five worst performers were Michigan (-18.9% – nobody’s buying cars), Nevada (-15.2% – nobody’s gambling), and Pennsylvania (-11.0% – nobody’s manufacturing anything). Michigan has actually been in a ‘recession’ based on the coincident index since February 2006, the longest streak in the nation.

There is some good news, if scant. Over the past three months, the indices have increased in two states (Mississippi and North Dakota) and stayed the same in one (Montana), while in the remaining states, the freefall basically continued. Interestingly, North Dakota, with a Gross State Product of US$27bn (as of 2008), but a population of just 600,000, hasn’t seen its coincident index contract since the tail-end of the dotcom bust, at the end of 2002.

State Coincident Indices, % chg y-o-y

So can this triumvirate pull the US out of its economic malaise? Unfortunately for the national economic accounts, these three powerhouses only make up a combined Gross State Product of US$150bn. That’s about the size of Hungary, or somewhere between Chile and Peru. And just over 1% of the total US economy.

Compare the fortunes of this trio with those of the five biggest state economies: California, Texas, New York, Illinois and Florida. These states make up about US$5.5trn in aggregate Gross State Product (think China plus Brazil, or perhaps Japan plus Australia), and each of their coincident indices are firmly in negative year-on-year territory. Interestingly, the state of California’s economy is making the headlines, but New York seems to be having a worse time of it, presumably due in part to the contraction in the financial services sector in Manhattan.

State Coincident Indices, % chg y-o-y

In other words, the US recession remains in full swing — so long as economic power is concentrated outside of Montana, Mississippi and North Dakota.