California Ranked As Nation’s 5th Fastest-Growing Economy
California’s business climate may be cooling, but the state is still among the nation’s swiftest-growing economy.
An intriguing collection of indexes produced by The Federal Reserve Bank of Philadelphia tracks relative economic performances among the states by using data that mimics growth and contraction in regional business output.
By this math, California’s economy grew 4.7 percent in the 12 months ended in February, a pace topped only by No. 1 Tennessee then Alabama, Nevada and Arizona. The U.S. economy, by this measure, grew at 2.8 percent.
Yes, it’s slower growth in recent times.
For example, California experienced 5.9 percent average yearly growth in this metric in the previous five years. That was nearly double the nation’s 3.2 percent growth and the nation’s third-best performance behind Nevada and Arizona.
To build this yardstick, economists at the Philadelphia Fed track employment, hours worked in manufacturing, unemployment rate, wages, inflation and weighed it against changes in a state’s gross domestic product.
The Philly Fed also takes this index and combines it with data measuring housing permits, unemployment claims, manufacturing delivery times and interest rates. From that state-by-state “leading” indexes are created, forecasting future performance for the upcoming six months.
This “leading index” logic shows the California economy growing at a 2.55 percent pace in the next six months — faster than the national 1.59 percent and the ninth-best among the states.
Trends like those found by the Philly Fed help explain why California shoppers pushed one measure of statewide consumer optimism to a new record high in March.
The Conference Board’s Consumer Confidence Index for California broke the previous peak set in December. Two factors were driving those good feelings: Shopper’s happiness with current conditions in March was just below December’s record, and the consumer outlook for the financial future hit a new high in March.
You can complain that the economy isn’t what it used to be — either from eons ago or from more recent history. But by this math, it’s hard to find many states where growth is much better.