Summer Bummer: Key Economic Indicator Plunges
Goldman Sachs chief economist Jan Hatzuis says that the Philly Fed business index is one of the best indicators of the direction of the economy. If so, economists' predictions of stronger economic growth in the second half of 2013 will again fall far short of expectations. On Thursday, the Philly Fed reported that its index of business activity plunged to 9.3 from last month's 19.8. Economists had been expecting a reading of around 15.
The Philadelphia Federal Reserve Bank releases a monthly index of manufacturing and business activity in Pennsylvania, New Jerse, and Delaware. A reading above 0 indicates economic expansion. A reading below 0 indicates economic contraction. While the August reading was positive, it indicates any economic recovery is slowing down quickly.
GDP growth in the last three quarters has been below 2%, the bare minimum level needed to spur job growth. Economists have been predicting that economic growth will pick up in the second half of the year. Thursday's report from the Philly Fed suggests those predictions are wishful thinking.
2013 is shaping up to be yet another year during Obama's tenure that the economy just muddles through. Just.