Philly Fed, Continuing Softness in Maryland and Virginia, 10 States to Watch on the
Employment Front and Wine Gone to Waste

Categories: Commentary, Uncategorized |

October 27, 2014

This week we take a look at the Philly Fed Coincident Index at the State level and highlight where things are good and not so good and look at counties within the not so good that demonstrate poor Geo Scores.  We use our mapping and filtering functions to look at State Unemployment. We then highlight Pennsylvania’s decision to waste some perfectly good wine instead of an auction or a night of tastings offered for a princely sum to raise some much needed revenue for the State.

Philly Fed State Coincident Index

Last week the Philly Fed released its State Coincident Index of economic indicators.  This index combines four state level variables:  nonfarm payroll employment, average hours worked in manufacturing, unemployment rate and wage and salary disbursements to measure the health of each State’s economy.

The most recent release shows strong monthly performance by Colorado (+0.7%), Kentucky (+0.7%), Michigan (+0.6%), Alabama (+0.6%) and North Dakota (+0.6%).  Laggards were Vermont (-0.2%), Alaska (-0.1%), Maine (-0.1%) and Massachusetts (-0.1%).

To get a sense of how the monthly change compares to recent trends, we plotted the 1-month percentage change against the 1-year percentage change.

Philly Fed State Coincident Index Percentage Change

(1 -year vs. 1-month)


Source: Federal Reserve Bank of Philadelphia, DIVER Analytics-Data Access Module, DIVER Data Solutions

Colorado, Michigan, and North Dakota all show strong 1-month and 1-year growth.  At the other end of the spectrum, Alaska ‘s poor performance is a continuation of a large decline over the last year (-2.5%).

Maryland and Virginia, States we have highlighted before as laggards, show weak 1-month and 1-year performance.

Massachusetts is particularly interesting.  Its 1-year change (+4.6%) is the fourth highest of any of the States, but the index shows a third straight monthly decline since peaking in May/June.  Certainly worth watching.  Other New England states Vermont, Maine, Rhode Island are also showing weakness.

The chart below shows a history of the Philly Fed value (indexed to January 2013) for selected states.

Philly Fed State Coincident Index

(January 2013 = 1)

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Source: Federal Reserve Bank of Philadelphia, DIVER Analytics-Data Access Module, DIVER Data Solutions

Massachusetts and South Carolina have both declined from June 2014 peaks.  Texas’ growth has been steady and strong.   After lagging from April 2014 to July 2014, Michigan has resumed growth.

Alaska’s Philly Fed index has declined in 17 of the last 20 months.  Federal fiscal cutbacks and weak energy markets have been a substantial drag.  A report in the Alaska Dispatch News over the weekend discusses the impact of oil prices and a new tax regime on Alaska State revenues.  The report outlines a scenario under which revenues would be $1.2 billion less than predicted in the spring.

DC/Baltimore Area Remains One to Watch

The Philly Fed data in the chart above highlights how dramatically the Maryland and Virginia economies have lagged.  This weakness has been widespread.  While Many DC/Baltimore area counties remain among the strongest in the nation, a look at the DIVER Geo Scores shows that several area counties have underperformed dramatically:  Washington, MD; Charles, MD; Prince George’s MD.

We continue to advise caution on economically sensitive DC/Baltimore area credits, especially those (like toll roads) that depend on assumptions of economic growth.

DIVER Geo Score:  DC/Baltimore Area Counties

(3-month average)

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Source: DIVER Analytics-Data Access Module, DIVER Data Solutions

National Employment Picture Continues to Improve, But Not in All States

The maps below show Unemployment for September 2014 and 2013 – the good news is Unemployment is less than it was a year ago in 44 States.  Some good news and a bit more when we look at the period September 2014 back to September 2013:

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Source: DIVER Analytics-Map Module

  • Labor Force is up in 30 States
  • Number of Employed People is up in 42 States
  • Number of Unemployed is up in only 7 States
  • Employed as a Percent of Population is up in 42 States
  • Labor Underutilization up in only 2 States (Alabama and West Virginia)
  • Personnel Income Per Capita and Average Weekly Wages are up across the board (not by much but up)
Alabama New Mexico
Kentucky Oklahoma
Maine Puerto Rico
Maryland Tennessee
Mississippi Vermont

With all the good news, are there States to keep an eye on as we contemplate the employment picture?  Yes, ten to be exact.  Year on year, we looked for those States that experienced declines in the: Labor Force, Employed People and Employed as a Percent of the Population.

Source: DIVER Analytics-Filter Module

Pennsylvania Misses Chance to Exercise Common (and Fiscal) Sense

Bloomberg reported this week on a plan by Pennsylvania to dump 2,447 bottles of expensive wine seized from a collector.  According to the story, Pennsylvania law requires that seized alcohol be either disposed of or donated to a hospital (someone please explain the logic of donating seized alcohol to a hospital).  In this case, the State has chosen to dispose of this vast collection of rare and expensive wines.

Surely, a way could be found to sell the wine and use the proceeds for a worthwhile cause (like the State budget).  It would only be a “drop in the bucket”, but every little bit helps.

In other news, our CEO, Gregg Bienstock, co-wrote an article with Ron Valinoti from MBIS on Fair and Reasonable Pricing and Best Execution in Muni Land, click here to read the full article.

This week, a couple of members of the Lumesis team will be at the NRS Compliance Conference in Arizona, while others will be in Boston, New York City and St. Louis.

Have a great week,


Mike Craft
Managing Director, Credit, Lumesis, Inc.


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