A quick follow-up to last month’s note on slipping coincident indicators:
December was relatively stable compared to the slide in November. Over the three prior months, “the indexes increased in 25 states, decreased in 22 states, and remained stable in three, for a three-month diffusion index of 6.” That is only one state worse on the decrease, and drop on the index from 8 to 6.
The single-month measure saw a notable improvement: In December, Indexes increased in 26 states, decreased in 16 states, and remained stable in eight, for a one-month diffusion index of 20. That’s a marked improvement over November 2023, where the indexes increased in 18 states, decreased in 21 states, and remained stable in 11, for a one-month diffusion index of -6.
Visually, you can see the improvement as more green-blue and less yellow-orange:
The prior slide suggested a March rate cut; this improvement now implies more of a 50/50 chance of the Fed acting in either March or May.
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Note: The next release isn’t until March 27, 2024, which will be for January coincident indexes. The February coincident indexes will be released the following week, on April 3rd.
Source:
State Coincident Indexes December 2023
The Federal Reserve Bank of Philadelphia, January 26, 2023
Previously:
State Coincident Indicators Slipping (January 2, 2024)
State Coincident Indicators: November 2022 (January 4, 2023)
Signs of Softening (July 29, 2022)
Why Recessions Matter to Investors (July 11, 2022)
