You know the phrase, “been down so long it looks like up”?
Well, that’s what it’s been like for the last two years reviewing government and private-sector statistics on an economy that’s ranged from mind-bogglingly awful to only slightly bad.
But for the first time in a long time, one regional economic indicator is flashing that the Philadelphia area’s economy began growing again during the first three months of 2010.
The Greater Philadelphia Coincident Indicator, created by Select Greater Philadelphia and IHS Global Insight, had fallen every month for 25 months before turning higher in March. And while that turn is exactly what Philip R. Hopkins, vice president of research at Select Greater Philadelphia, has been waiting for, he’s not ready to turn cartwheels.
Why? Because, after all, it is just one measure of a complex, interconnected economy. Unemployment remains stubbornly high, and many worry that we’re in for a jobless recovery. In fact, lots of folks aren’t convinced the current economic recovery is sustainable. The housing market is not back on track. And Europe’s sovereign-debt crisis has unnerved the markets for the last month.
“I’m happy to see it turn up,” Hopkins said about the regional coincident indicator. “But there’s nothing to suggest this is a roaring, robust economy.”
You can think of a coincident indicator as a mirror, while a second measure, the leading indicator, acts more like a crystal ball. Coincident indicators track current changes in the business cycle, especially frequently updated labor-market trends. Leading indicators, such as stock prices, tend to forecast what the overall economy will be doing in six to nine months.
The Greater Philadelphia Leading Indicator hit its low point in March 2009. You can compare the monthly value against a 12-month moving average. The trend shows the monthly values have been above the moving average since August - a positive sign that indicates growth.
But the monthly values of the Greater Philadelphia Coincident Indicator remain slightly below their 12-month moving average, indicating the economy is still struggling to make the transition from downturn to upswing.
The change in direction for the Greater Philadelphia Coincident Indicator comes eight months after many economists said they believed the recession ended in the United States. (The National Bureau of Economic Research is the official arbiter of changes in the business cycle, and it has not called an end to the recession that began December 2007.)
If Select Greater Philadelphia and its data-crunching economics partner, IHS Global Insight, are right about the timing, it shows once again how Philadelphia tends to lag the nation in emerging from economic torpor. At least this time, that lag can be measured in months, not years.
Still, jobs remain a big concern. On Thursday, IHS Global Insight released its forecast of the average annual growth rate for employment between 2010 and 2015 for the states. Pennsylvania employment is expected to grow at 1.44 percent, while New Jersey’s will grow at 1.41 percent and Delaware’s 1.74 percent.
Idaho is the hot potato, with IHS forecasting an employment growth rate of 2.51 percent, while Iowa is expected to mosey along with a meager 0.92 percent growth rate.
One way to look at the success of an economic recovery is when employment returns to its prerecession peak. And the bad news is IHS forecasts that total nonfarm payroll employment in the Philadelphia region will not reach that level until the third quarter of 2013.
That’s 38 months from now, and far longer than the 25-month downturn for the regional coincident indicator.