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Metro area economic conditions

FRED has updated its Metro Area Economic Conditions Indexes through September 2017

Last week the St. Louis Fed updated its estimates of economic growth through the third quarter of 2017 for 68 of the U.S.’s most populous metropolitan statistical areas (MSAs). Average growth across these MSAs was 2.7 percent, which is consistent with the 2.3 percent year-over-year growth in U.S. real GDP during the same period.

The data are summarized in a FRED release table called Economic Conditions Index by BEA Region (under the main category of Metro Area Economic Conditions Indexes). Growth was the fastest in the Southwest and the slowest in the Plains. Given the geographical aspects here, we can use GeoFRED to map the economic growth for these MSAs in September 2017: For example, activity declined in Detroit, Hartford, Houston, and Miami, while growth was relatively strong in San Antonio, Louisville, and San Jose.

Impact of Hurricanes on the Houston and Florida MSAs

There’s a noticeable decline in the growth rates of the MSAs affected by hurricanes Harvey and Irma last fall: The graph above shows Houston’s 0.5 percent decline in August and 1.0 percent decline in September; Miami’s 1.9 percent increase in August and 0.6 percent decline in September; and Tampa’s near 4 percent increase in August and previous months and 2.4 percent increase in September.

Economic Activity in the Eighth Federal Reserve District MSAs

Overall growth among the four largest MSAs in the Eighth Federal Reserve District continued to improve at a modest pace during the third quarter of 2017, as can be seen from the graph below. Growth in Little Rock, St. Louis, and Louisville picked up, while growth in Memphis slowed a bit. Overall third-quarter growth was fastest in Louisville at 4.3 percent, followed by Little Rock at 3.3 percent, Memphis at 2.2 percent, and St. Louis at 1.9 percent.

How these graphs where created: The original post referenced an interactive map from our now discontinued GeoFRED site. The revised post provides a replacement map from FRED’s new mapping tool. To create FRED maps, go to the data series page in question and look for the green “VIEW MAP” button at the top right of the graph. See this post for instructions to edit a FRED map. Only series with a green map button can be mapped.

For the first graph: Go to the Releases section on FRED and select the category “Metro Area Economic Conditions Indexes.” From this page, select “Economic Conditions Index by BEA Region.” Then, by checking the box next to their names, select the Houston-The Woordlands-Sugar Land, TX (MSA) and the Miami-Fort Lauderdale- West Palm Beach, FL (MSA) and click on “Add to Graph.” Use the slide bar below the graph to zoom in on the period of interest.

For the second graph: Again, go to the release tables page on FRED. Select “Economic Conditions Index by BEA Region.” From here, select the St. Louis, MO-IL (MSA), the Little Rock-North Little Rock-Conway, AR (MSA), the Memphis, TN-MS-AR (MSA), and the Louisville/Jefferson County, KY-IN (MSA) and click on “Add to Graph”. Then adjust the dates to 2017-01-01 to 2017-09-01. From the “Edit Graph” menu, use the “Modify frequency” option to select “Quarterly” and the “Aggregation method” option to select “Average.” Repeat this step for the other three lines. From the “Format” tab, under “Graph type,” select the option “Bar.”

Suggested by Asha Bharadwaj and Charles Gascon.


Measuring and comparing local economies: Memphis vs. Nashville

When we want to assess the national economy, we typically look at the growth rate of gross domestic product (GDP), as it accounts for all goods and services produced in the economy. Similar data are also available for local economies in a measure called gross metropolitan product (GMP).

Unfortunately, local GMP data are calculated only once per year and released with a nine-month lag. For more timely information, we use factor analysis to estimate the common trend (or factor) underlying the movement in 12 variables of regional economic activity. This common factor is used to produce an index of economic activity for 51 MSAs across the nation. Each index is calibrated to match the annual growth rate and volatility of GMP for the MSA. In other words, the value of the index can be interpreted as an annual growth rate of the local economy, which allows for ease of interpretation and comparison across metro areas. For more details, see this working paper.

Just as job growth and unemployment rates vary from one region to the next, economic growth of two areas (even in the same state) can also vary. The graph plots the economic conditions indexes of the two largest metro areas in Tennessee, and we can see how the Nashville metro area has grown at a faster pace than the Memphis metro area over the past few decades. During the 2001 recession, Nashville’s economy actually expanded most months. During the Great Recession, growth was negative in both regions, with growth resuming in Nashville in August 2009 and in Memphis in March 2010. In recent years, the Nashville economy has grown steadily at around 5 percent, while the Memphis economy has slowed from about 2.5 percent per year to around 1.5 percent.

How this graph was created:
Search for “metro area economic conditions” and select the metro areas you want to add to the graph. Or go to the Economic Conditions Index Release table, select the MSAs you want to view, and select “Add to Graph” at the bottom of the table.

Suggested by Maria Arias and Charles Gascon

View on FRED, series used in this post: MPHAGRIDX, NVLAGRIDX

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