The coincident economic index for Louisiana is an empirical measure in real time of economic conditions in the state. It is constructed by a model that includes headline unemployment, nonfarm payroll numbers, wages & salaries, and average private sector hours worked. It is calculated and reported by the Federal Reserve Bank of Philadelphia and is weighted to match the trend of Louisiana gross state product.
The variables mentioned above serve to provide policy makers, business leaders, and academics with a real-time glimpse into how markets and general economic activity are evolving. This measure move pro-cyclically (during good economic times it increases and in bad economic times it decreases).
Like with GSP it is difficult to differentiate between marginal changes in the index value. Below the growth rate in the coincident index is plotted. This is directly comparable to the growth rate in GSP. A forecast of this variable communicates our best guess in real time about where the Louisiana economy is moving.
The impact of hurricane Katrina is clearly seen as it represents the single largest departure from the fundamentals of the state economy. Similar to many other indicators though, we can see a difference pre and post the financial crisis of 2007-2009.
Coincident Index Growth Rate Forecasts
Forecasts1 of the coincident index are made from an aggregation of multiple statistical models designed to approximate the underlying data generating process of the available data. A Bayesian model averaging approach is used here to capture the joint uncertainty that any given model may be misspecified as well as to capturing the probabilistic uncertainty inherent in each individual estimate. Observed data is given in blue while forecasts are presented in orange. The weighted average of all models used is represented by the solid orange line. The upper bound and lower of the cone of uncertainty surrounding these estimates is represented by the dashed upper and lower lines respectively.
Forecasts are provided as a convenience and for informational purposes only without any explicit or implied warranty. The authors and publishers of this post and site bear no responsibility for the information provided here and cannot be held liable for any negative consequences that may arise due its publication. Forecasting the future is inherently a tricky proposition, and all forecasts have an error term attached to them. Please exercise caution when making financial and business decisions based on the information provided. Use this information as a single input into your decisions making process.↩