US Economy 2020: Possible Stagnation As Philadelphia Fed Reports Decline In Q4

The Federal Reserve Bank of Philadelphia reported Wednesday economic activity in eight states fell in the fourth quarter and stagnated in three others while activity rose in 39 states.

In December, the coincident indexes showed a downward trend in nine states, stability in four and increased activity in 37.

Economic activity nationwide for the quarter fell to 62 at the end of the quarter, it’s lowest level since 2010, with West Virginia, Delaware and Pennsylvania contracting the most: West Virginia contracting nearly 1%, and Delaware and Pennsylvania at least 0.6%. The economies of Iowa, Missouri, Montana, Oklahoma and Vermont declined between 0.1% and 0.5%.

The states with the most robust economies, those increasing more than 1%, were Alabama, Arizona, Maryland, Michigan, Nevada, Oregon, South Carolina, Utah and Washington.

The economies of Mississippi, South Dakota and Wyoming were unchanged.

The analysis is based on nonfarm payroll employment, average hours worked in manufacturing by production workers, the unemployment rate, and wage and salary disbursements.

Fourth quarter gross domestic product results have not yet been released, but the Federal Reserve Bank of Atlanta projected an increase of 1.7%, down from the 2.1% seen in the third quarter. GDP in the first quarter of 2019 was estimated at more than 3%. The St. Louis Fed estimated the overall GDP for 2019 at 2.2% but sees growth slowing in 2020 to 1.8%.

Despite the slowdown, economists are not predicting an end to the current economic expansion, now in its 11th year, the longest in U.S. history.

The U.S. Federal Reserve, in announcing its decision Wednesday to hold interest rates steady, said U.S. economic activity remains moderate, with solid gains in employment and household spending on the rise.