The Economic Index for the U.S. Ends 2019 on a Soft Note and Foreshadows a Slowing of the U.S. Economy Ahead
The Decision Analyst U.S. Economic Index stood at 117 in October 2019, an increase of 3 points from the previous month, but no change from October 2018. Over the course of the past 12-months, the Index remains essentially flat. This suggests that the U.S. economy will continue to grow at a sluggish rate in coming months (i.e., less than 2% annual rate). The Economic Index tends to lead overall U.S. economic activity by 6 to 12 months. Below is the past-20-year history of the U.S. Economic Index.
“As you study the above chart of the Economic Index for the U.S., you will note that the Index has been flat for the past 2 years. U.S. consumers have done their part to keep the economy strong—by continuing to spend money. The government has massively stimulated the economy through low interest rates and deficit spending. Corporations, however, have not done their part. It was hoped that the corporate tax cuts at the beginning of 2018 would lead to a rising tide of business investment. Instead, major corporations have used most of the tax cuts to buy back their stock, a vast waste of money. Trade disputes and tariffs are also having a chilling effect on the U.S. economy, as are labor shortages in some industries. The threat of recession continues to be significant. Slow economic growth in Europe and China also pose risks to the U.S. economy. In summary, the economy in 2019 is likely to end on a soft note, and go into 2020 at a crawl,” said Jerry W. Thomas, President/CEO.
Almost all of the U.S. Census Division saw declines in the past 12 months. The Mountain Census Division declined 7 points, while the East South Central Census Division declined 5 points. The South Atlantic Census Division increased 1 point in the past 12 months, it was the only division to see an increase. These charts are 3-month moving averages, so the numbers are lower than the overall Economic Index (that is, the time periods covered are slightly different). This aberration will correct itself over time.
The following chart compares the U.S. Economic Index to Decision Analyst’s Economic Indices for other countries. In North America, both Canada and Mexico saw declines in the past 12 months. Mexico decreased 1 point, while Canada decreased 3 points. In South America, Brazil increased 10 points in the past 12 months, while Peru increased 5 points. Meanwhile, Chile dropped 13 points in the past 12 months. In Europe, France increased 5 points in the past 12 months, and Italy increased 2 points. The other European countries saw no change or experienced a decline. The European and U.S. economies are increasingly at risk of recession. Some of the major countries tracked by Decision Analyst are shown below.
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, Brazil, Canada, Chile, Colombia, France, Germany, India, Italy, Mexico, Peru, the Russian Federation, Spain, 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 40 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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