The Economic Index for the U.S. Predicts Economic Uncertainty Through 2020

The Decision Analyst U.S. Economic Index stood at 115 in February 2020, a 4-point drop over the past 12 months and a 3-point drop from January 2020. A look at the graph below shows that the U.S. Economic Index has been relatively flat over the past 2 years, but the Index turned downward in late February 2020. The Economic Index tends to lead overall U.S. economic activity by 6 to 12 months. Below is a 20-year history of the U.S. Economic Index.

February 2020 Economic Index

“The Index fell 3 points in February from January, a relatively steep drop. The February survey took place from February 20 to 28, so declines in U.S. stock markets and growing publicity about the coronavirus no doubt helped account for the sharp drop in the February U.S. Economic Index,” said Jerry W. Thomas, President/CEO of Decision Analyst. “U.S. stock markets were in free fall during most of the data-collection period, and news about the potential dangers of Coronavirus added to the negativity. Since consumers account for almost 70% of all economic activity in the U.S., a fall in the Economic Index portends a decline in U.S. consumer spending. The U.S. economy grew slowly in January and February 2020. The fall in the February Index indicates a weak March, so the first quarter will show little, if any, growth. The Federal Reserve and the U.S. government can do little to provide extra economic stimulus (they have depleted their ammunition). The continuing trade disputes and tariffs are also exerting downward pressure on the U.S. economy.” said Thomas. “The risk of recession is rising.”

Census Divisions

Four of the U.S. Census Divisions saw declines in the past 12 months. The East North Central Division fell by 2 points and the West North Central Division fell by 5 points. The West South Central Division fell by 1 point and the Pacific Division fell by 1 point. The Middle Atlantic and South Atlantic Census Divisions each increased 5 points and the New England Census Division increased by 4 points. The following charts are 3-month moving averages, so the numbers differ from the overall Economic Index (that is, the time periods covered are slightly different). This differential will correct itself over time.

February 2020 Economic Index US Census Division

 
Global Index

The following chart compares the U.S. Economic Index to Decision Analyst’s Economic Indices for other countries. In North America, Canada is up by 1 point in the past 12 months while Mexico is down by 4 points. South America is in trouble. Argentina is an economic disaster. Chile’s index is down by 20 points and Brazil’s is down by 5 points. Columbia is the only South American country to see an increase in the past 12 months (10 points).

In Europe, the indications are more slow growth. Italy and France each increased by 3 points, while the Russian Federation and Spain each declined by 3 points. Globally, many economies are increasingly at risk of slow growth and/or recession. Some of the major countries tracked by Decision Analyst are shown below.

February 2020 Economic Indicies

   
Methodology

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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Interactive Economic Index

  Decision Analyst Economic Index

Click on the map above to open Decision Analyst's Interactive Map for the United States and its nine census divisions.

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