U.S. Economy Muddles Along, According to Decision Analyst’s Economic Index
Arlington, Texas—The Decision Analyst U.S. Economic Index registered 107 in October 2015, a 1-point increase from September 2015. Over the past few months the U.S. Economic Index has trended downward, suggesting that the risk of a recession is growing. The Economic Index tends to lead U.S. economic activity by 6 to 12 months. Below is the past-10-year history of the U.S. Economic Index.
“The U.S. economy continues to muddle along, and the U.S. Economic Index forecasts more of the same slow growth in coming months. One of the fundamental problems in the U.S. economy is the stagnation of median household incomes since the year 2000. A majority of U.S. households are earning less in real dollars than they were 15 years ago, and this is creating a demand deficit. The mass retailers, such as Walmart and Target, are finding it extremely difficult to grow nominal sales (actual sales in current dollars). A declining share of U.S. adults are participants in the workforce, another factor reducing average household incomes,” said Jerry W. Thomas, President/CEO of Decision Analyst. “The U.S. appears to be locked in a pattern of slow to no growth. Weaknesses in the European Union’s economy and the Chinese economy add more uncertainty to future economic prospects. China, in particular, is a major risk factor, since its great real estate and construction bubble is coming to a close. An extended period of economic stagnation looms ahead for the world economy and the U.S.,” said Thomas.
In the past 12 months the West North Central Division has gained the most of all the U.S. Census Divisions, increasing 6 points from 103 in October 2014 to 109 in October 2015. The East North Central Census Division is the only division to decline in the past 12 months, decreasing from 106 in October 2014 to 105 in October 2015.
The following table compares Decision Analyst’s U.S. Economic Index to its Economic Indices for other countries.
In Europe, the UK has regained its footing, with an increase of 6 points from 103 in October 2014 to 109 in October 2015. In South America, Argentina is the only bright spot; its Economic Index increased 8 points in the past 12 months, increasing from 82 in October 2014 to 90 in October 2015. Meanwhile, Brazil’s economy is collapsing; it declined 22 points from an Index of 110 in October 2014 to 88 in October 2015.
The Decision Analyst Economic Index is based on a monthly online survey of several thousand households balanced by gender, age, and geography. The scientific survey is conducted in the last 10 days of each month. The Economic Index is calculated from 9 different economic measurements using a sophisticated econometric model. The result is a snapshot of coming economic activity in each country surveyed, as seen through the eyes of representative consumers living in the respective countries.
Decision Analyst conducts its concurrent economic surveys each month in Argentina, Australia, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, United Kingdom, and the United States. Whenever the Decision Analyst Economic Index is greater than 110, it tends to signal an expanding economy. An Index value of 90 to 110 suggests a no-growth or slow-growth economy, and near or below 90 generally indicates economic contraction. These guidelines vary by country, however.
About Decision Analyst
Decision Analyst (www.decisionanalyst.com) is a global marketing research and analytical consulting firm specializing in strategy research, new product development, advertising testing, and advanced modeling for marketing decision optimization. For over 35 years, the firm has delivered competitive advantage to clients throughout the world in consumer-packaged goods, telecommunications, retail, technology, medical, and automotive industries.
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