New DIVER Geo Scores for August 2015

August 31, 2015

This week we review our proprietary DIVER Geo Scores, highlight the best and worst performing States and cities as well as provide you a link to get the scores themselves.  We also highlight the overly optimistic passenger projections made by some airports and chart the dispersion in U.S. economic growth.

August Geo Scores

Earlier today, we released the most recent DIVER Geo Scores for States, counties and cities. The DIVER Geo Scores represent a relative score of the economic health of a U.S. State, county or city. Based on a scale of 0-10, with 10 being the best, this data is updated monthly and is calculated from multiple economic and demographic factors related to three primary data categories—employment, income and housing.

The DIVER Geo Scores are available here.


Among the leaders, Rhode Island and Michigan showed solid improvement in labor markets (as measured by unemployment rate).  Puerto Rico showed greater improvement in its unemployment rate than any of the 50 States.

Energy states have shown the weakest labor market conditions: North Dakota, Oklahoma and West Virginia all had the least improvement in unemployment rates.  In the last year, West Virginia’s unemployment rate has risen from 6.4% to 7.6%.


New Jersey continues to be a laggard.  A weak housing market, marked by lagging home price appreciation and high rates of foreclosure have been a drag on the State’s economic health.

The weakness in New Jersey is most pronounced in the southern portion of the State, but is also impacting northern counties as well.


For more charts and analysis, sign up for a DIVER Analytics Trial.

Minneapolis-St. Paul Airport Continues to Use Optimistic Estimates

Last week, the publication AviationPros reported that the governing body for the Minneapolis-St. Paul Airport (MSP) recently updated long range traffic forecast.

When MSP last issued bonds, we discussed in our Commentary, Delta’s unusual dual hub approach in the Midwest and de-hubbing risk to MSP (especially when Delta’s Hubbing Covenant expires in 2020) create unique uncertainty for future traffic at MSP.

We also highlighted MSP as an example of the flawed forecasting that is rampant in the airport industry.  Every one of MSP’s last seven bond related traffic forecasts has been too optimistic. To their credit, Jacobs flattened out the growth curve in the 2010 forecast.  It is not clear who made the projections announced last week.


The article in AviationPros cited Michael Boyd, our favorite airport commentator, “…it’s no longer useful to project airline traffic based on general trends in demographics and the economy.”  Overly optimistic demand projections create risks to airport operators of over building (and over borrowing).

Unreliable forecasts can also have broader public policy implications.  We suspect that some portion of the widely touted US infrastructure gap is due to the natural incentives for public officials to overestimate demand for services.

Chart of the Week:  Philly Fed Shows Strong Growth Overall, But Wide Dispersion

Last week, the Federal Reserve Bank of Philadelphia released its State Coincident Indexes.  Overall the indices reflect solid growth across the nation.   Looking at the 3-month average change, West Virginia (-1.7%), North Dakota (-0.8%), and Virginia (-0.3%) were the laggards.  Leaders were Maine (+1.9%), Indiana (+1.7%), and Vermont (+1.5%).


The Philly Fed statistics continue to show a wide dispersion in growth levels between the strongest and weakest States.  As of July, the top quintile States had improved by +1.1% over the previous three months.  The bottom quintile States had only improved by +0.4%.


The difference between the upper quintile States and the bottom quintile States has been increasing all year. This dispersion affirms our belief that economic analysis must be performed at the State and local level.


Have a great week,

Michael Craft, CFA