These 16 states are already in a recession
- Sixteen US states' economies contracted between July and October, according to the Philadelphia Fed.
- While some economists believe a recession may come in the next year, the economies of 33 states grew.
The economies of 16 US states contracted between July and October, even as economists are still betting the US can avoid a recession.
The latest State Coincident Indexes release from the Federal Reserve Bank of Philadelphia shows a third of state economies contracted during the three-month period, compared to just nine states between June and September. Between July and October, the indexes increased in 33 states and remained stable in one state.
These changes were most pronounced in West Virginia, with a three-month contraction of over 2.7%. Michigan and Montana also had contractions of over 1%, while Missouri, Illinois, and Iowa had declines of about 0.8%.
Meanwhile, Maryland, North Dakota, and South Carolina had economic growth of over 1% during the period. Texas came in at 0.85%, similar to Nevada and Wyoming. California's economy grew by 0.47%, while Florida experienced a 0.65% increase.
Among the 10 states with the highest GDPs, seven — California, Texas, Florida, Pennsylvania, Ohio, Georgia, and North Carolina — are growing their economies, according to the three-month data.
This growth "should be enough to keep the US economy as a whole from falling into recession this quarter," DataTrek Research cofounders Nicholas Colas and Jessica Rabe said in a note on Monday. "How these trends develop through the balance of Q4 will tell us a lot about the state of the US economy as we enter 2024."
Looking at month-over-month rates, 27 states experienced economic contraction, while 16 states saw economic growth.
A recession occurs when an economy suffers a widespread and severe downturn across different dimensions. The state coincident indexes capture several of those dimensions across labor markets, industrial production, and people's real incomes.
The coincident indexes pull together four state-level indicators, including nonfarm payroll employment, the unemployment rate, average hours worked in manufacturing by production workers, and wage and salary disbursements deflated by the consumer price index. Those measures echo the metrics the National Bureau of Economic Research tracks to determine whether the national economy as a whole is in a recession.
Experts remain divided on whether the US will avoid a recession in 2024. Some believe a recession is likely in 2024, including Citadel founder Ken Griffin, who told Bloomberg he expects to see a "recessionary environment" around the second quarter.
Others, though, think a recession may not arrive until 2025 — or may not occur at all. Raphael Bostic, the president of the Atlanta Federal Reserve, told CNBC, "We are not going to see recession, that is not in my outlook. We are going to see a slowdown, and inflation will get down to 2%."
Correction — November 29, 2023: An earlier version of this article misidentified a state with an economic decline of more than 1%. It is Michigan, not Wisconsin.